TS.4.7 Costing the impacts of climate change

Impacts of unmitigated climate change will vary regionally. Aggregated and discounted to the present, they are very likely to impose costs, even though specific estimates are uncertain and should therefore be interpreted very carefully. These costs are very likely to increase over time.

This Assessment (see Tables TS.3 and TS.4) makes it clear that the impacts of future climate change will be mixed across regions. For increases in global mean temperature of less than 1-3°C above 1990 levels, some impacts are projected to produce benefits in some places and some sectors, and produce costs in other places and other sectors. It is, however, projected that some low-latitude and polar regions will experience net costs even for small increases in temperature. It is very likely that all regions will experience either declines in net benefits or increases in net costs for increases in temperature greater than about 2-3°C [9.ES, 9.5, 10.6, T10.9, 15.3, 15.ES]. These observations confirm evidence reported in the Third Assessment that, while developing countries are expected to experience larger percentage losses, global mean losses could be 1-5% of GDP for 4°C of warming [F20.3].

Many estimates of aggregate net economic costs of damages from climate change across the globe (i.e., the social cost of carbon (SCC), expressed in terms of future net benefits and costs that are discounted to the present) are now available. Peer-reviewed estimates of the SCC for 2005 have an average value of US$43 per tonne of carbon (i.e., US$12 per tonne of CO₂) but the range around this mean is large. For example, in a survey of 100 estimates, the values ranged from −US$10 per tonne of carbon (−US$3 per tonne of CO₂) up to US$350 per tonne of carbon (US$95 per tonne of CO₂) [20.6].

The large ranges of SCC are due in large part to differences in assumptions regarding climate sensitivity, response lags, the treatment of risk and equity, economic and non-economic impacts, the inclusion of potentially catastrophic losses, and discount rates. It is very likely that globally aggregated figures underestimate the damage costs because they cannot include many non-quantifiable impacts. Taken as a whole, the range of published evidence indicates that the net damage costs of climate change are likely to be significant and to increase over time [T20.3, 20.6, F20.4].

It is virtually certain that aggregate estimates of costs mask significant differences in impacts across sectors, regions, countries, and populations. In some locations and amongst some groups of people with high exposure, high sensitivity, and/or low adaptive capacity, net costs will be significantly larger than the global aggregate [20.6, 20.ES, 7.4].