The Impacts and Costs of Climate Change Page: vi

                                
The Impacts and Costs of Climate Change
Conclusions
The review has shown that the impacts of climate change and their economic costs are significant.
Initial assessment of the benefits of stabilisation targets shows that many of the major effects of
climate change could be avoided, and the benefits of post-Kyoto policies could be very significant in
terms of reductions in impacts and social costs. There is also the major benefit of reducing the risk of
major catastrophic events.
The review here has shown that the information on impacts and economic costs is increasing.
However, there remain major information gaps and further research is needed to improve the
information available to fully assess the benefits of policies. From the information available, we
believe that monetary valuation of climate change policies is possible, and should be taken forward.
However, we also believe that care must be taken in presenting and interpreting the monetary
estimates, for example by avoiding the use of single simplistic estimates: given the uncertainty over
future scenarios and impacts, monetary valuation, and ethical and moral issues, there is no 'single'
estimate of the social costs of climate change. Further to this, we make a number of additional
recommendations that would improve the analysis presented here.
* Firstly, we recommend that work is undertaken to present a more disaggregated analysis of the
physical impacts of climate change, and the benefits of future policy.
* Secondly, we recommend that more disaggregated information is presented on the economic
valuation of climate change, showing the balance of positive and negative economic effects
(winners and losers) by impact category and region, rather than using single aggregated global
values.
* Finally, we recommend that the analysis of future policies should consider full sensitivity and
uncertainty analysis, along with the information of key impacts, to allow the comparison of
benefits against the possible costs of future mitigation policies.
To progress these areas, we recommend a number of specific research conclusions:
First, some further work with the integrated assessment models:
* Additional model runs with PAGE and FUND would be useful to test different future policies
(towards stabilisation targets for CO2 equivalents of 400 ppm, 450 ppm, etc), with different
assumptions relating to baselines, discount rates, equity weighting, and uncertainty analysis in
relation to climate sensitivity. This should include analysis of long-term benefits, but also the
specific benefits that would accrue from policies implemented between 2010 and 2025.
* It would also be extremely useful to run the models to look at the marginal social costs of climate
change in different time periods, and for different pollutants (e.g. CO2, CH4, N20).
Secondly, to complement (and validate) the global assessments with detailed sectoral studies and
regional integrations:
* To undertake some further analysis to progress a disaggregated analysis of the estimates by region
(including Europe vs. international, and with the latter split by region). This would include
disaggregating the model outputs (e.g. from FUND and PAGE), but also comparing these
estimates to others in the literature from the regional studies.
* To undertake some further analysis to progress a disaggregated analysis of the estimates by impact
category (e.g. health mortality cases, changes in agricultural production in tonnes, etc). This
would include dis-aggregating the model outputs, but also comparing these estimates to others in
the literature from the regional studies.
* There is a general need for the models to move towards more dynamic analysis of assessment,

both for impact assessment (the dynamic processes of vulnerability and adaptation) and valuation.
Thirdly, to explore the main elements in the risk matrix (above) that are not well captured currently:
* To extend the analysis of bounded risks (e.g. in relation to floods, storm damage) and non-market
valuation (e.g. health and ecosystems).

AEA Technology Environment, August 2005

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