17.2.3.2 Global estimates

Some adaptation costs are implicitly included in estimates of global impacts of climate change. Tol et al. (1998) estimate that between 7% and 25% of total climate damage costs included in earlier studies such as Cline (1992), Fankhauser (1995b) and Tol (1995) could be classified as adaptation costs. In addition, recent studies, including Nordhaus and Boyer (2000), Mendelsohn et al. (2000) and Tol (2002), incorporate with greater detail the effects of adaptation on the global estimation of climate change impacts. In these models, adaptation costs and benefits are usually embedded within climate damage functions which are often extrapolated from a limited number of regional studies. Furthermore, the source studies which form the basis for the climate damage functions do not always reflect the most recent findings. As a result, these studies offer a global and integrated perspective but are based on coarsely defined climate change and adaptation impacts and only provide speculative estimates of adaptation costs and benefits.

Mendelsohn et al. (2000) estimate that global energy costs related to heating and cooling would increase by US$2 billion to US$10 billion (1990 values) for a 2°C increase in temperature by 2100 and by US$51 billion to US$89 billion (1990 values) for a 3.5°C increase. For a 1°C increase, Tol (2002) estimates global benefits from reduced heating at around US$120 billion, and global costs resulting from increased cooling at around US$75 billion. The same study estimates the global protection costs at US$1,055 billion for a one-metre sea-level rise. There are preliminary estimates of the global costs of ‘climate proofing’ development (World Bank, 2006), but the current literature does not provide comprehensive multi-sectoral estimates of global adaptation costs and benefits. The broader macroeconomic and economy-wide implications of adaptations on economic growth and employment remain largely unknown (Aaheim and Schjolden, 2004).