The cost of climate change
Events such as floods, droughts, and storms cause a lot of damage to societies and economies, but can we quantify the role of climate change in the impact of these events? "The climate crisis is changing the frequency of these events, and they are becoming more intense and more damaging to the economy," says Professor Ilan Noy, Chair in the Economics of Disasters and Climate Change at Te Herenga WakaVictoria University of Wellington's Wellington School of Business and Government. His research covers the economic consequences of everything from climate change to earthquakes to COVID-19. By combining an economic assessment of damage from extreme weather events with an atmospheric science assessment of the increased probability these events will occur, Noy calculates the current economic impacts of a changing climate. "We can measure exactly the climate change footprint of floods in New Zealand, for example, in terms of economic damage." In the United States, Noy and colleagues applied the same approach to Hurricane Harvey, which hit Houston, Texas in 2017. The storm caused massive flooding and around $90 billion in damage. Roughly two-thirds of this cost ($67 billion) was associated with climate change. A costly retreat With many major cities around the world situated on the coast, the potential damage from rising sea levels is significant. In the AsiaPacific region, the looming threat of inundation has already led to an announcement by the Indonesian Government that the capital will be moved from Jakarta to an inland location on the island of Borneo. "Jakarta is lower than sea level and flooding events are increasing dramatically, so the move is about avoiding that risk. But the price tag on this is huge. It will cost tens of billions of dollars, which is an example of the price of the climate crisis." Despite the projected costs, Professor Noy says that anticipatory action is better than dealing with the aftermath of disasters and makes sense economically. Politically, though, it may be far more difficult to convince a community to abandon their homes and retreat from the coast. "The cost of this 'managed retreat' for a country like New Zealand is large but not insurmountable. It is significantly less than the recovery from the Canterbury earthquake." Following the 2011 Christchurch earthquake, 20,000 people were relocated from affected areas and compensated by the government, in a move that Professor Noy says was "handled ably". "We need to start thinking about similar policies for the impacts of climate change. Our quantification work is important because policymakers need to understand what will happen, and what it will cost if we ignore these issues. "It is far better for us, for the government, and for future generations and future governments if we act now, rather than continuing to kick the climate change can down the road." To find out more about world-leading research, go to Te Herenga WakaVictoria University of Wellington's website, wgtn.ac.nz/wellington Sponsored content