The costs of adaptation to climate change in developing countries could go up to US$100 billion per year, according to preliminary findings in a new global study from The World Bank.
The Economics of Adaptation to Climate Change
(EACC) study, funded by the governments of the Netherlands, Switzerland, and the United Kingdom, has been released at the latest round of UN climate talks in Bangkok.
The figures assume that temperatures rise by 2C (3.6F) in the next 40 years.
How to finance adaptation, and how much money will be available, is a major theme in the talks that are supposed to produce a new global treaty this year.
The major costs would come from improving coastal protection and protecting transport links, the bank says.
"Faced with the prospect of huge additional infrastructure costs, as well as drought, disease and dramatic reductions in agricultural productivity, developing countries need to be prepared for the potential consequences of unchecked climate change. In this respect, access to necessary financing will be critical," said Katherine Sierra, World Bank Vice President for Sustainable Development.
The report released Wednesday finds that the highest costs will be borne by the East Asia and Pacific Region, followed closely by Latin America and the Caribbean, and Sub-Saharan Africa. The drier scenario requires lower adaptation costs in total in all regions, except South Asia.
"The EACC study provides a range of estimates for a world in which decision makers have perfect foresight," says Sergio Margulis. "In the real world where decision makers hedge against a range of outcomes, the actual expenditures are potentially higher than this."
The report stresses that development strategies must maximize flexibility and incorporate knowledge about climate change as it is gained. It also finds that adaptation costs decline as a percentage of GDP over time, suggesting that countries become less vulnerable to climate change as their economies grow.
"Economic growth is the most powerful form of adaptation," said Warren Evans, Director of the World Bank's Environment Department. "However, it cannot be 'business as usual'. Adaptation minimizes the impacts of climate change, but it does not address its causes. There is no substitute for mitigation to reduce catastrophic risks," he said.
"The World Bank study makes plain that taking action in favor of adaptation now can result in future savings and reduce unacceptable risks," said Bert Koenders, Dutch Minister for Development Cooperation. "At this point, the costs this will entail can still be borne by the international community, to judge by the GDPs of rich countries, but for poor countries they are unacceptably high. More than ever, mitigation, adaptation and development cooperation are needed to make the poor less vulnerable to climate change. International public financial support for adaptation in the poorest developing countries should be new and additional, so as not to jeopardize the Millennium Development Goals."
UK Prime Minister Gordon Brown has already proposed setting up a $100bn fund for adaptation money, and last month the European Commission published suggestions on how the burden might be shared between funding nations, and between the public and private sectors.
But no consensus has emerged on the proposal.
A study by the International Institute for Environment and Development (IIED) and the Grantham Institute has suggested the true costs of adaptation could be far higher than the World Bank estimates.
Professor Martin Parry, who led the IIED report, said the World Bank appeared to have omitted some significant elements from its analysis.
"The biggest of these is the cost of adapting ecosystems, which could cost as much again, even if it were possible," he said.
"And then there are other sectors that are not included, such as manufacturing, mining, energy and tourism, each of which would have an adaptation cost."
The overall cost would also be higher if temperatures rose by more than 2C.
Earlier this week, a new UK projection suggested that if the world's energy use continued along its current trajectory, a rise of 4C was likely by 2070.
The World Bank will release further details before December's UN climate summit in Copenhagen, with the full report due out in March.