Table 4-11: Estimated national average annual costs (US$ million) of impacts of climate change on water resources and riverine flooding, UK, over next 30 years (ERM, 2000).
	5% reduction in supply by 2030	10% reduction in supply by 2030	20% reduction in supply by 2030
Volume of water (Ml day-1)	757	1514	3028
Supply-side
– Reservoirs	3.3–25	6–50	12–100
– Conjunctive use schemes	140–1200	280–2430	570–4900
– Bulk transfers	0.5–90	1–175	2–360
– Desalination	4–12	10–24	19–48
	5% reduction in municipal demand by 2030	10% reduction in municipal demand by 2030	20% reduction in municipal demand by 2030
Volume of water (Ml day -1	420	835	1670
Demand management measures	0.5	1	9

Aggregated estimates of the cost of impacts of climate change on water resources have been prepared for Spain, the UK, and the United States. Ayala-Carcedo and Iglesias-Lopez (2000) estimate that the reduction in water supplies under one scenario would cost nearly US$17 billion (2000 values) between 2000 and 2060, or about US$280 million yr^-1 in terms of increased expenditure to maintain supplies and lost agricultural production. A study in the UK estimated the costs of climate change for water supply and flood protection (ERM, 2000). Table 4-11 shows the costs (converted to US$) involved in making up shortfalls of 5, 10, and 20% in the supply or demand across Britain, under several different types of approaches (see Section 4.6.2). The study assumes that the same change in water availability occurred across all of Britain—which probably overstates the costs because many parts of Britain are projected to have increased runoff—and estimated costs on the basis of standardized costs per unit of water. The study does not consider the feasibility of each of the potential adaptations. The cost of demand management measures increases substantially for large reductions in demand because more expensive technologies are needed. Note that a 5% reduction in demand represents just more than half the water of a 5% increase in supply; reducing domestic demand by 20% has a similar effect to increasing supply by 10%. The ERM study assumes that annual riverine flood damages would increase, because of increased flooding, by about US$80–170 million yr^-1 over the next 30 years (compared to a current figure of about US$450 million), and the average annual cost of building structural works to prevent this extra flooding would be about US$40 million.

There have been two sets of estimates of the aggregate cost of climate change for water resources in the United States, using different approaches. Hurd et al. (1999) examined four river basins under nine climate change scenarios (defining fixed changes in temperature and precipitation) and extrapolated to the United States as a whole. Their study uses detailed economic and hydrological modeling and suggests that the largest costs would arise through maintaining water quality at 1995 standards—US$5.68 billion yr^-1 (1994 US$) by 2060 with a temperature increase of 2.5°C and a 7% increase in precipitation— and through lost hydropower production (US$2.75 billion yr^-1 by 2060, under the same scenario). Costs of maintaining public water supplies would be small, and although loss of irrigation water would impact agricultural users, changed cropping and irrigation patterns would mean that the economic losses to agriculture would be less than US$0.94 billion yr^-1 by 2060. However, this study extrapolates from the four study catchments to the entire United States by assuming that the same climate change would apply across the whole country.

Table 4-12: National average annual cost of maintaining water supply-demand balance in the USA (Frederick and Schwarz, 1999). Values in 1994 US$ billion.
Management Strategy	HadCM2	CGCM1
“Efficient”	-4.7	105
“Environmental”	-4.7	251
“Institutional”	not calculated	171

Frederick and Schwarz (1999) take a different approach, looking at 18 major water resource regions and 99 assessment subregions, with two climate change scenarios for the 2030s based on climate model simulations. Water scarcity indices were developed for each assessment subregion, comparing scarcities under “desired streamflow conditions” and “critical streamflow conditions” on the demand side with “mean streamflows” and “dry-condition streamflows” on the supply side. These indices played a key role in determining the costs of meeting various streamflow targets. A supply-demand balance in each region is achieved through supply- and demand-side measures, each of which has an assumed unit cost. Three strategies were defined for each region: “environmental,” focusing on protecting the environment; “efficient,” maintaining supplies to users; and “institutional,” placing limits on changes in environmental indicators and the area of irrigation. The total national cost of climate change was determined under each strategy by aggregating least-cost measures in each subregion. Table 4-12 summarizes the estimated national costs under the three strategies and two scenarios. The costs are considerably greater under the drier CGCM1 scenario than under the wetter HadCM2 scenario (which, in fact, implies a benefit), and they vary with management strategy. Costs under the drier scenario are considerably higher than those estimated by Hurd et al. (1999), reflecting partly the different approaches used and partly the spatial variability in the effect of climate change considered by Frederick and Schwarz (1999).

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