The ACCREU project workshop on “Costing and Economic Analysis of Adaptation Strategies” was held on September 26th online. The workshop was organized by Paul Watkiss Associates and the University of Graz. The aim of this workshop was to discuss research outcomes by various European institutions on costing strategies of adaptation policies with stakeholders. Over 30 participants attended, both from European and national governments and various research institutions.
In the first part of the workshop, case studies from various countries on costing of adaptation strategies were presented. The topic of assessing costs and benefits of national adaptation programmes is an evolving research field. A series of presentations thus gave an overview of different strategies of assessing these costs.
Paul Watkiss (Paul Watkiss Associates) presented the costing approach for the Third National Adaptation Programme of the United Kingdom, where adaptation actions were classified into different objectives, based on the prioritization of adaptation in their policy objectives. This helped to estimate public budget costs arising from adaptation that are not passed through to private actors.
Theodoros Zachariadis from the Cyprus Institute presented work on assigning costs to adaptation strategies in Cyprus, focusing on the funding gap between investment needs and already assigned or ongoing costs.
Guillaume Dolques from the from the French Institute for Climate Economics (I4CE) presented a bottom up-approach to estimate costs of adaptation policies for France. They also used a classification approach to estimate costs contributed by adaptation objectives and set up a monitoring scheme to assess resources, needs and funding options.
Finally, Clemens Haße from the Environment Agency Germany presented the process of monitoring and evaluating the progress of adaptation spending. In contrast to the other case studies, they followed a top-down approach starting from the total federal budget, classifying budget titles by the amount of adaptation spending.
The presentations helped to highlight similarities and differences between different costing approaches as well as peculiarities of national budgets arising from different levels of privatization and fragmentation of state budgeting. For instance, in France adaptation costs accrue primarily at the national level due to the high degree of centralization, while in Germany a considerable share of adaptation costs arises on a federal state level.
After these presentations, the presenters discussed questions posed by participants and clarified their approaches and understanding of adaptation costs. Several questions considered the nature of classified adaptation costs that do not have adaptation as the main objective, but consider climate change in their implementation or exhibit adaptation services as a co-benefit. For the case of France, these costs are considerably high and hard to quantify, as stressed by Guillaume Dolques. Many measures, such as subsidies for road renovation, civil protection and expenditures that give co-benefits in adaptation, take climate change into account but it is difficult to dissect the adaptation cost share.
In the discussion, stakeholders reflected on the nature of policy planning and decision-making. The practitioners were interested in the choice of the counterfactual scenario: in the private sector, counterfactuals usually do not include climate change impacts per default, skewing arising cost structures. Until when there is a common understanding of what classifies as additional adaptation, it is crucial to report clearly which measures count as additional adaptation against a certain level of climate change.
One attendee noted that future policy objectives often are not costed ex-ante, as these would lead to commitments that could clash with objectives by national treasuries. Moreover, presenters agreed that bottom-up approaches cannot present the total additional costs for additional adaptation measures. While aggregate sums make media headlines, they are insufficient to inform policymakers in their decisions.
After the discussion of the first part of the workshop, Eva Preinfalk from the University of Graz followed up with macroeconomic and fiscal effects of adaptation. The presentation focused on implications of assessed costs and benefits for certain impact chains in Spain, Austria and the Netherlands, and additionally, of different financing strategies (spending shifts versus bond financing) in the United Kingdom.
Overall, the workshop demonstrated the stakeholder interest in adaptation costing and correct communication of assessed costs and benefits. In particular, there is no common ground yet of what counts towards additional adaptation in the future, highlighting the importance of precisely stating classification criteria for different levels of adaptation and costing structures, especially in bottom-up evaluation approaches. The workshop successfully started a discussion on mainstreaming adaptation costs in national adaptation plans, and added to the common understanding of different costing approaches and importance of precise communication to policymakers.