This paper presents a methodological roadmap to assess climate change economic impacts. To go from the large-scale climate change projected by global climate models to its consequences on society, one has first to downscale this change at the spatial scale that is pertinent to investigate economic impacts. Then, one has to translate local changes into possible changes in direct losses. Of course, adaptation strategies could be undertaken to limit these losses and these possibilities have to be investigated, even though it is often out of reach to provide a quantification of their benefits. Finally, economic mechanisms enter into action to reduce or amplify direct losses: propagation from sectors to sectors, production losses during the reconstruction period, macroeconomic feedback, etc. These indirect effects have to be investigated. Again, adaptation strategies can reduce indirect losses. The quantitative effects of these adaptation strategies are often difficult to assess, but possible options have to be discussed.
Here, this roadmap is applied to one type of climate change economic impacts, namely the hurricanes, in one region, the U.S. Atlantic and Gulf coastline. Despite the difficulty of the exercise, the aim is to illustrate the usefulness of such an assessment and a methodology to do so. The complexity of this interdisciplinary analysis, the multiplicity of the models that have to be used, the uncertainty in the results from each of these models, and the number of unknown parameters demonstrate the difficulty of climate change impact assessment.
The series of modelling exercises presented in this article can inform various stakeholders, who need specific information. City planners and flood protection designers need information about probability of landfall; insurers need projections of future average annual direct losses and of future probabilities of exceeding various loss levels; national and local governments have to take into account economic indirect effects and, therefore, need assessments of future total losses and ideas about adaptation strategies. The current analysis, in spite of its numerous limitations, tries to provide a comprehensive view of future hurricane risks, as pertinent as possible for all stakeholders.
Obviously, the tools used to assess the changes in landfall probabilities, direct losses and indirect losses are far from perfect, and their results can, and must, be questioned. Different models, based on different assumptions, would have found different results. In presence of so much uncertainty, the main shortcoming of this paper is the fact that only one model was used for each component of the analysis. In a more comprehensive analysis, several models would be used across a range of possible assumptions to bracket the uncertainty of possible results.
With respect to hurricane intensity and frequency, indeed, it seems that the Emanuel's model is particularly pessimistic, predicting a strong increase in hurricane intensity in response to global warming. There is no consensus in the scientific community about future levels of hurricane activity and other researchers (e.g., Landsea, 2005) are more optimistic. City planners and flood protection designers, nevertheless, should take into account the possibility that future hurricane risk could change by as much as is predicted by Emanuel's model. This is especially true when alternatives to be decided about involve very long timescales and are not easily reversible. Many strategies to limit hurricane damages are obviously ''no-regret'' strategies, meaning that they would yield significant benefit even if hurricane frequency and intensity remain unchanged. But climate change could make their benefits larger, and other strategies could also become cost-effective because of the additional risk that climate change causes.
Clearly, it is much more difficult to design a flood protection system or to manage land-use when there is such a large uncertainty about one of the main natural hazard risks. This is, however, inescapable with the reality of a future with climate change. Climate change introduces more complexity in all decisions that is related with climate conditions, but there is much to be gained by taking into account possible future changes in climate and their full economic impacts. Moreover, this uncertainty is associated with a cost, the cost of uncertainty, because, to avoid extensive retrofitting in the next decades, all infrastructures must be designed much more resilient than it was the case in absence of climate change.
This analysis demonstrates that the magnitude of costs associated with extremeevent changes are likely to be large and that the indirect costs are a significant portion of total costs and therefore need to be included in cost estimates. In spite of the difficulties to assess economic costs of such events, the large orders of magnitude suggest that decision-makers should not ignore these in designing responses to climate change. Decision-makers, from land-use planners and insurers to those involved in the design and implementation of climate policies, will be better able to manage the risks of climate change if they understand the dynamic nature of climate change, the uncertainty that it creates, and the potential scope and extent of its economic impacts.
Acknowledgments The author wants to thank Kerry Emanuel, who developed the hurricane model and provided me with the sets of synthetic tracks, and Raphael Bille, who provided information about the adverse side-effects of hard protection against hurricanes and sea level rise. Francois Gusdorf, Jan Corfee-Morlot and Auguste Boissonnade provided useful suggestions and comments on the manuscript. All remaining errors are the author's.
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