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- Report n° 7: The Stern review
Report n° 7: The Stern review
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Table of contents
- Three key elements on the nature of climate risks
- Interactions between inertia and uncertainty in the infrastructure sector
- Three key elements on the nature of climate risks
Interactions between inertia and uncertainty in the infrastructure sector
Housing stock is one example where uncertainty regarding future climate and/or infrastructure inertia plays a key role. Turnover time for buildings in France, for instance, is around 150 years.
So buildings erected in the first decade of the 20th century should be designed according to the prevailing climate up to 2150.
But that climate is still unknown: according to the Météo France model, the Paris climate in 2080 will be the same as the present one in Bordeaux, but according to the Hadley Center model, it may be closer to the present climate in Cordoba in southern Spain.
Both models therefore suggest the use of radically different optimal building standards. If we knew today what the future climate will look like, the inadequacy of the housing stock would be easy to manage because a slow and inexpensive adaptation process could be initiated immediately.
Figure 1
Figure 1 : Climate analogues for some European cities. Each one is located where the present climate is comparable to what it will be for that city at the end of the century, according to the Météo-France model at the top, and the Hadley Center model at the bottom.
Two climate patterns are supposed to be comparable if they have the same temperature and rainfall seasonal cycles. From Hallegatte et al, 2007, Climatic Change.
The uncertainty-inertia pair therefore makes perfectly anticipated adaptation very unlikely.
Even though a proactive strategy appears rational, by improving housing insulation standards for example, the risk of significant short-term costs to reap uncertain and far-off gains means it would be politically difficult to implement. For instance, faced with structural housing shortages in France, no government can afford to implement measures that would put up construction costs, specially if it only means mitigating climate damage in fifty years' time. Consequently, part of the housing stock stands every chance of being ill-adapted well before the end of the century.
It would result in French cities becoming less attractive1, and this may have a very negative impact in a world where major cities are in competition to attract businesses and corporate managers.
1 Similarly, how attractive would South California be, knowing that temperatures could rise to
120°F each summer and that water could be expensive and rationed? Taking things further, how can California as a whole and its neighbouring states adapt their economies to a drop in attractiveness of the South Californian heartland? Here again, infrastructure managers will have a key role to play in impact-mitigation.
The protection system for New Orleans is another example.
Its reconstruction is being considered and it will shape the city for more than a century. What is the likelihood of a category 5 hurricane striking the city around 2080? No one knows the answer, which makes it very difficult to determine the scale of the protection system (see Hallegatte, 2006 and Fig. 2).
In addition, the fact that the city withstood Hurricane Katrina very badly shows it is not enough for all the parameters to be well known for rational decisions to be taken. With parameters made much more uncertain because of climate change, poor adaptation is even more likely.
Figure 2
Figure 2 : Annual probabilities for a category 1 to 5 hurricane striking the American coastline, 1900-2005 data (in black), according to the K. Emanuel model for current climate (in dark grey), and according to the same model for a 2°C warmer climate (in light grey).
The probability for category 5 hurricanes increases more than threefold. Large uncertainties remain concerning these results and other models find an unchanged probability, which shows the substantial uncertainty that makes determining the scale of the New Orleans protection system difficult. From Hallegatte, 2007, Journal of Applied Meteorology and Climatology.
One final example concerns rainfall variations observed in southern Argentina.
To date, there is no clear-cut explanation for the anomaly: it is not known whether it results from climate change, in which case it is permanent, or from natural climate variations, in which case it is temporary. Farmers are therefore wondering whether to adapt by changing activities (switching from agriculture to breeding) or by investing massively in irrigation equipment, or if they should wait for the anomaly to disappear. Uncertainty as to future local climate is the main obstacle to optimal adaptation of the activity and therefore it generates significant costs for such a key sector of the Argentinian economy.
One of the consequences of the mechanism results from the fact that large uncertainties make anticipation, often revised when a crisis occurs, highly volatile. In another area of large uncertainty, we saw that one pair of diseased birds played havoc with the poultry sector because they engendered fear of a significant spread of avian flu. Similarly, one or two heat waves could easily give the impression that a large percentage of the housing stock will become uninhabitable because of climate change. True or not, such revised anticipation could well bring down house prices.
In conclusion, in a comprehensive assessment of impact and adaptation mechanisms, imperfect anticipation may lead to long periods of non-adaptation in high inertia sectors, with significant economic consequences. For an analysis of climate policies, these mechanisms render inadequate any climate change damage assessment that does not explicitly represent adaptation mechanisms that include the technical, cultural and institutional constraints governing our societies and our economies.