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This project aims to provide an overview of the most crucial methodological issues that climate change cost assessment and climate change control policies must face and to develop a methodological framework to be implemented when trying to estimate the costs of climate change in practice, on peculiar case-studies. The project tests the goodness of the methodological approach developed, by applying the costing methodology to one Italian costal area, the Sangro area, located in the Abruzzo region.

The complexity of climate change cost assessment involves several crucial dimensions, including non-market evaluation, risk and uncertainty, baseline definition, equity and discounting.

The first aim of this project is to provide an overview of the most crucial methodological issues that climate change cost assessment and climate change control policies must face, and to develop a methodological framework to be implemented when trying to estimate the costs of climate change in practice, on peculiar case-studies.

Moreover, the project tests the goodness of the methodological approach developed, by applying the costing methodology to one Italian costal area, the Sangro area, located in the Abruzzo region. A multi-scenario approach is therefore applied, which estimates the direct costs of alternative future risk scenarios based on extrapolations at 2100. Risk scenarios are defined considering the risk of future sea-level-rise, estimated by a team of climatologists and geologists, and making some assumptions on future socio-economic territorial conditions.

The project is a sub-task of a project coordinated by ENEA (Progetto di fattibilità per la valutazione della vulnerabilità e degli impatti delle variazioni climatiche sulla Regione Abruzzo ed ipotesi di adattamento).The consortium consists of various Italian consultants with complementary experience, including geologists and climatologists, from ENEA, and environmental economists and engineers from FEEM.

FEEM has provided three reports within this project.

  • The first report provides a detailed qualitative analysis of the study area, the “Piana del Sangro”, which identifies the most vulnerable territorial dimensions to climate change impacts. These include local goods and services, either market and non market, such as: agricultural and residential areas, coastal areas with recreational and natural values, industrial plants and transport infrastructures, and so forth.
  • The second report provides a methodological review of the main available environmental valuation methods that can be applied within a costing approach of climate change damages and develops a methodological framework to be implemented when trying to estimate the costs of climate change in peculiar case-studies.
  • In the end, on the basis of the results of the previous reports, in the third report FEEM applies the costing methodology to the study area. Using a multi-scenario approach, taking into account alternative future risk and socio-economic conditions, the team provides a quantification of the direct costs of climate change, with special focus on those due to the risk of sea-level rise and land loss.
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Climate change is one of the major environmental challenges confronting the global community in the twenty first century. The social and economic dimensions of climate change will invest an increasingly prominent role in the policy agenda of national governments, in both the industrialized world and the developing world, where poverty and a fragile environment exacerbate the vulnerability to climate change impacts. All the potential costs and benefits associated with climate change and climate change responses must be understood to allow policy makers to design the appropriate combination of mitigation and adaptation measures.

The total costs of climate change involve costs associated with mitigation measures, adaptation measures and residual damage. If the costs of mitigation policies and measures can be relatively well identified, the economic costs of climate change impacts cannot be easily assessed. In particular the quantification of the residual damage and the comparison of the costs associated with mitigation and adaptation measures with the residual damage address some problematic issues.

The first obstacle is due to the difficulty of a physical assessment of the residual damage in the presence of mitigation or adaptation measures. The subsequent transposition of physical impacts into monetary terms is also a delicate step, given that climate change impacts involve both market and non-market goods and services, covering health, environmental and social values. The cost of climate change impacts should address the full social cost of the impacts, including both private and external costs. The complexity of climate change cost assessment thus involves several crucial dimensions, including non-market evaluation, risk and uncertainty, baseline definition, equity and discounting.

The first aim of FEEM in this project, therefore, is to provide an overview of the most crucial methodological issues which climate change cost assessment and climate change control policies must face, and to develop a methodological framework to be implemented when trying to estimate the costs of climate change in practice, in peculiar case-studies. Furthermore, the project intends to test the goodness of the methodological approach developed, by applying the costing approach to one Italian costal area, the Sangro area, located in the Abruzzo region. This allows a quantification of the costs of the potential future direct impacts of climate change in such coastal area.