Economic aspects of the adaptation

Transcription

1 Economic aspects of the adaptation Dr. Jari Silander Finnish Environment Institute (SYKE) Expert meeting «Assessment of Vulnerability and Adaptation to the Climate Change in the Chu-Talas Transboundary Basin»

2 Content Finland and EU Adaptation framework Economic principles Case study What next?

3 FINLAND AND EU

4 SYKE in the Finnish Environmental Administration Ministry of the Environment Ministry of Agriculture and Forestry Finnish Environment Institute Environmental Permit Authorities Centre for Economic Development, Transport and the Environment overall supervision supervision of use and management of water resources

5 Transboundary waters - examples 1. Regulation of Lake Inari (1040 km²) in the Northern Finland Agreement since 1959 (Russia, Norway Finland) Ms. Kati Pritsi S(SYKE) Secretary of the Finnish party 2. The Lake Saimaa and river Vuoksi (Russia, Finland) Started in The Finnish-Norwegian Transboundary Water Commission Since The Finnish-Swedish Frontier Rivers Agreement is enforced by the corresponding Commission (1972).

6 THE EU Policy & the River Basins The River Basin Management Plans: - Consider the resilience of biodiversity, ecosystems and water - take into account the impacts of climate change. - By 2015 plans should consider climate change in depth Policy in river basin management: The EU: The Water Framework Directive (Directive 2000/60/EC) & The 'Floods' Directive (2007/60/EC) National legislation FRAMEWORK EXPLAINED LATER CAN ALSO BE USED IN FINLAND TO ADAPT TO CLIMATE CHANE

7 ADPATATION FRAMEWORK

8 The UK - DEFRA - Department for Environment Food and Rural Affairs 1. Climate & socio economic scenarios 2. Estimate baseline 3. Indentify adaptation options 4. Estimate: Costs & Benefits 5. Calculate net present value

9 ECONOMICS

10 ECONOMIC PRINCIPLES NOT THE CHEAPEST! - IT S ABOUT GETTING THE MOST GIVEN WHAT WE HAVE Focus Objective: increase net value of the regional output of goods and services, expressed in monetary term policy priorities Consistency Recommendate the most cost effective or least costly environmentally acceptable method of achieving the desired level of resource protection. monetary & nonomonetary Methods Dealing with the allocation of scarse resources: Maximize, optimize, cost effectivness and least cost analysis Challenges: Guidance and standards - imperfect market Shoudl we have decling discount rate? What is our maximum evaluation period?

11 ECONOMIC a big step in history In 1879: The Mississippi River Commission. The Commission included civilians and the president was from the Army engineer and the Corps of Engineers (USACE) The USACE had veto power over any decision by the Commission. The Flood Control Act of 1939 was instrumental in establishing the CBA as federal policy. To overcome barriers: Unable external support Unwilling build up motivation

12 What a decision maker should know?- The EU recommendations What are the actual and potential impacts of climate change in the sector? What are the costs of action/inaction? How do proposed measures impact upon and interact with policies in other sectors?

13 Understand standings reduce barriers 2050 New balance? What is current situation (optimum)? What is a balance in changing climate? Who will pay for extra protection? Benfits and cost?

14 6 Steps to adaptation using the 1. Current state (CBA?) : objectives, policy & standings 2. Adaptation alternatives 3. Define costs and benefits 4. Measure costs and benefits in monetary terms 5. Conduct sensitivity analysis 6. Make recommendation Recommendations to guarantee transparency Use realistic alternatives Do not leave out any potential options To include always status quo situation (current situation) Also indentified good policies (should we change our policy?)

15 A PILOT CASE FROM FINLAND Use of the CBA method (6-steps) Hazard Map Vulnerable (GIS) Risk Map Risk Management Plan

16 Flood damages in Finland Variation between years is a very large (3-20 M ) Agricultural damage reduce since 1899 (over 50 % to 10 %) Building damage increase since 1899 (5% to over 50 %) Change of (policy /legistlation, insurance policy, compensation) Agriculture Forestry Buildings Roads and bridges Public service Industry-material Industry-productional Others Total damage

17 THE CITY OF PORI 1. Current state - Water quality should be improved - Flood risk is high - Insurance policy expected to change due to the EU policy - Standings: the city (dam owner), the GOV (risk compensation)

18 2. Adaptation alternatives 1. Do nothing (status quo) 2. Build water retention basins 3. Increase quantity of protection 4. Combine points 2 & 3

19 3. Cost and benefits a) Costs: 1. A water retention basin (loss of agricultural land etc.) 2. A protection system (construction & maintenance & operation) b) Benefits: 1. Retention basin (improved water quality N & P, irrigation, risk reduction) - you may call these ecosystem service 2. A protection system (risk reduction value)

20 4. Measure costs and benefits in monetary terms Inundation damage Damage at Change of Weighted to crops 0,5 m probability damage Period ( ) (%) (ha) Jan Feb ,0 Dec Sum EAD Expected Annual Damage reduction ( /year) 20

21 5. Sensitivity analysis - ask experts, min/max, EAD & Monte Carlo

22 6. Recommendation We recommend to improve protection build a retention basin, if it can be done with annual costs less than 1000 per million m 3 of water Decision: Protection system was put under the Dam Safety Act The GOV will stop paying compensation for building damage (2014->) Retention basins may be built later.

23 WATER SERVICES WATER LEVEL (m) UUS LOS HAM PIR KAS ESA PSA PKA KSU LSU PPO KAI LAP -5-6 keskiarvo max Economic Impact of Drought in Finland during by sectors Energy

24 2002 Rain Discharge from Finland Discharge (m3/s) 30 water basins Ground water storage Ground water 2002

25 Electricity price in nordic stock market /MWh Hydro power blue slice (100% circle) 88TWh 33 TWh 5 TWh WATER POWER Problem and impact -water power reservoir capacity in Scandinavia ~120 TWh (-20 %) - in Finland 6 TWh lost -5 Mt more CO 2 -price: house holds +10 % & industry +30 % Adaptation: - energy saving recommendation was give (cold winter) - in Norway over 3000 MWh saved by closing aluminum plants Cost: Lost energy ~ 100 Me Replacement cost: ~50 Me PROBABILITY OF EVENT & CHANGE

26 Questions: Considering economic aspects of climate change adaptation In the Chu Talas Basin UNDP-UNECE Project under the Environment and Security Initiative Funding: FinWaterWEI The Ministry for Foreign Affaris of Finland We present and explain the Finnish and other international experience on assessing costs and benefits of extreme weather events and climate change adaptation. We propose tasks breakdown and sequence of activities adapted as much as possible to the local situation and resources available. Do we want to allocate scarce resource efficiently? Do we have what it takes to do it consistently? Do we have resources? experts and or guidelines. DISCUSSION- Do we need a pilot case? Yes how to proceed? : Express your interest I could Maybe, we have to think about this. 26

27 EXTRA

28 Economic Impact of Drought in Finland during existing reports Sectors: water suppliers, forestry, agriculture, power production, buildings, inland water traffic, nature

29 Steps if the CBA is used: 1. Current state (CBA?) : objectives, policy & standings 2. Adaptation alternatives 3. Define costs and benefits 4. Measure costs and benefits in monetary terms 5. Conduct sensitivity analysis 6. Make recommendation Recommendations to guarantee transparency Use realistic alternatives Do not leave out any potential options To include always status quo situation (current situation) Also indentified good policies (should we change our policy?)

30 Data for agricultural evaluation Agronomic potential of the land. Type of farming. Width and topography of the flood plain or area to be benefitted. Need for various types of production, whether in agricultural products or in urban and industrial services. The land use change supported by this degree of protection or service. Availability of markets for new products. Restrictions imposed by marketing quotas, or zoning regulations. Computer programs exists, but they are data intensive!