8.5 Costs

Studies focusing on the welfare costs (and benefits) of climate-change impacts aggregate the ‘damage’ costs of climate change (Tol, 1995, 1996, 2002a, b; Fankhauser and Tol, 1997; Fankhauser et al., 1997) or estimate the costs and benefits of measures to reduce climate change (Nordhaus, 1991; Cline, 1992, 2004; Nordhaus and Boyer, 2000). The global economic value of loss of life due to climate change ranges between around US$6 billion and US$88 billion, in 1990 dollar prices (Tol, 1995, 1996, 2002a, b; Fankhauser and Tol, 1997; Fankhauser et al., 1997). The economic methods for estimating welfare costs (and benefits) have several shortcomings; the studies include only a limited number of health outcomes, generally heat- and cold-related mortality and malaria. Some assessments of the direct costs of health impacts at the national level have been undertaken, but the evidence base for estimating the health effects is relatively weak (IGCI, 2000; Turpie et al., 2002; Woodruff et al., 2005). Where they have been estimated, the welfare costs of health impacts contribute substantially to the total costs of climate change (Cline, 1992; Tol, 2002a). Given the importance of these types of assessments, further research is needed.

Mortality attributable to climate change is projected to be greatest in low-income countries, where economists traditionally assign a lower value to life (van der Pligt et al., 1998; Hammitt and Graham, 1999; Viscusi and Aldy, 2003). Some estimates suggest that replacing national values with a ‘global average value’ would increase the mortality costs by as much as five times (Fankhauser et al., 1997). Climate change is also likely to have important direct effects on productivity via exposure of workers to heat stress (see Section 8.2.9). Estimates of economic impacts via changes in productivity ignore important health impacts in children and the elderly. Further research is needed to estimate productivity costs.