Climate change, ecosystem services and biodiversity loss: an economic assessment

Authors: Paulo A.L.D. Nunes, Helen Ding


The present policy brief contributes to the ongoing debate by addressing the economic valuation of the induced climate change impacts on European biodiversity and ecosystem services.Firstly, we evaluate the impacts of climate change on biodiversity and ecosystem services, building upon the Millennium Ecosystem Assessment (MA) conceptual framework, considering biodiversity as the underpinning of ecosystems and ecosystem services, which in turn contribute to human well-being. In this context, this step encompasses the determination of the role of biodiversity in the creation of provisioning, regulating and cultural services.Secondly, we develop an integrated, hybrid valuation approach so as to assess the economic magnitude of the involved impacts: integrated because it is characterized by the use of both of bio-physical and economic valuation models and hybrid because it is characterized by an integrated use of alternative economic valuation methodologies.Finally, we extend state-of-the-art general equilibrium frameworks by introducing an additional sector, the ‘ecosystem’ sector, into the underlying “market-based” general equilibrium assessment. Estimation results show that induced climate change impacts on biodiversity and ecosystem services involve significant welfare losses, of about 145-170 billion US$ and therefore autonomous adaptation cannot be invoked as the solution to climate change.Furthermore, the distribution of the impacts varies widely according to the nature of the ecosystem service under consideration and to the geo-climatic region. Thus, the decision of including biodiversity and ecosystem services is expected to be a key component of the future climate policy framework, along with the evaluation of mitigation and planned adaptation strategies to be presented at the 15th COP, Copenhagen, 2009.

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