Transcript Slide 1
Economic Impact of Climate Change in the Pacific Islands: Some Issues and Challenges Biman Prasad Professor and Dean of the Faculty of Business and Economics, The University of the South Pacific Outline Introduction Impacts: why be concerned? Magnitude of Economic Impacts Lessons from Stern Review What are the challenges to minimize adverse impacts Policy Responses Introduction Financial crisis presents opportunities for climate change policies Fiscal stimulus not only to create demand but to promote sustainable development Australian Govt- action on climate change is economically responsible- delaying it will increase the cost by 15% 190 nations seeking to conclude a new UN treaty in Copenhagen next year Serious Implications on agriculture and water sectors Environmental Kuznet’s Hypothesis should be revisited by large developing countries Impacts: Why be concerned? Climate change impacts are complex Direct and Indirect impacts climate change and sea level rise of the magnitude predicted by IPCC would affect many natural systems which will affect the survival and provision for human beings Regional Changes in climate change El Nino SO (ENSO) importance to Pacific El Nino brings drought- more frequent since the 1970s Impacts: Examples Changes in natural productivity and biodiversity Decrease in cereal output in most tropical countries Increased water shortages Adverse economic impacts Risk of flooding in small and low lying islands Increase threats to human health increase inequities between poor and rich countries Risk of irreversible climate changes Magnitude of Economic Impacts Stern Review findings (1) A simple conclusion: the benefits of strong and early action far outweigh the economic costs of not acting Climate change will affect the basic elements of life for people around the world –access to water, food production, health, and the environment Hundreds of millions of people could suffer hunger, water shortages and coastal flooding as the world warms. Stern review (2) The review estimates that cost of no action could cost 5% of global GDP per annum now and for ever If a wider range of risk is taken into account the cost could be 20% of GDP In contrast cost of reducing greenhouse gas emissions would only amount to 1% of GDP with a range of +/-3% reflecting the uncertainties China $4.8b of a 100-year high water tide- cost of action would cost $400m Current and Emerging threats in the Pacific Islands Natural disasters- cyclones, typhoons, hurricanes and floods are getting more severe Sea level rise, innundation, storm surges and coastal erosion- Pacific countries most vulnerable Fresh water scarcity- due to drought through high average temperatures and contamination from industrial pollution Food scarcity- due to land erosion and water scarcity Economic Impact of Natural Disasters in the Pacific Prasad, Mckenzie and Kaloumaira (2005 study) Direct and Indirect impacts and it is not easy to estimate. The official damage assessments omit many of the indirect costs. Impacts on PICs (1) In the 1990s, for example, cost of extreme events in the Pacific Island region is estimated to have exceeded US$1 billion (Bettencourt and Warrick, 2000). This included the cost of Cyclones Ofa and Val, which hit Samoa in 1990/91, causing losses of US$440 million, which was greater than the country’s average annual gross domestic product (GDP) in recent years. In Niue, Cyclone Heta is estimated to have caused an impact of about NZ$37.7 million, which is approximately 25% of its GDP (Prasad, Mckenzie and Kaloumaira, 2005) Impacts on PICs (2) Cyclone Ami and related flooding in Fiji (2003) Sectors Social Economic Sectors Infrastructure Utilities Total Subsectors Housing Health Agriculture Education Tourism Sugar Non-sugar agriculture Roads Water supply Sewerage Telecommunicatins Power supply Total Cost (FJ$) $28,737,506 $65,277,448 $5,792,435 $4,580,400 $104,387,789 Impacts on PICs (3) Climate Change in the Pacific is also expected to have wide ranging impacts on key economic sectors on which countries are heavily reliant These include subsistence food production, agriculture, fisheries, forestry, tourism, infrastructure, water, energy , transport and health. Assessments in agriculture (Singh (1990), fisheries (Lehodey (2000) and tourism (Beccken (20O4) for example, indicate that economic losses are expected to be significant. Challenges for minimizing the impacts Building capacity and tools for appropriate assessment Collection of appropriate data 4 Steps 1. Gather background information on the natural hazard event 2. Sectoral Assessments 3. Cross sectoral assessments 4. Overall Impact Assessment Allocation in the budget for mitigation and adapation Policy Responses to Climate Change Impacts (1) PICs are small players in reducing the extent of climate change For them policy responses to reduce the negative impact of climate change on the economy is important Public policy to manage resources efficiently- both market based and governmental action Policy Responses to Climate Change Impacts (2) New technologies to reduce the risk of damages Managing wastes Developing better water infrastructure- less prone to damage by natural disasters Reducing negative impacts on agriculture and fisheries- food security Promote public-private partnerships in developing appropriate infrastructure to reduce the economic risk Providing better social safety networks-reduce burden on government Education and economic incentives to prepare communities so that the negative impacts could be minimized THANK YOU