Abstract

Climate change is happening. To reduce its economic impact, adaptation and mitigation actions are urgently needed. Decision-makers need to understand their benefits and costs compared to not acting at all. 

This briefing summarises the main assessment concepts, key methods and related challenges and constraints, and provides practical examples of approaches relevant to the EU.

Key Messages:

• Lack of adaptation action is costly. Despite ongoing mitigation and adaptation efforts, economic losses from weather and climate-related extremes in the EU reached over half a trillion euros between 1980 and 2021. This signals an urgent need to speed up the implementation of adaptation measures. 
• Adaptation actions are cost-efficient when the benefit-cost ratio exceeds 1.5. Measures resulting in a lower ratio require careful consideration because of the uncertainty of their economic costs and benefits. 
• Assessing the benefits of adaptation measures requires taking into account not only the reduced impact of natural hazards but also their contribution to overall economic development. Assessments also need to consider ancillary benefits to biodiversity, air quality, water management, greenhouse gas emission reductions, and health and well-being.
• Assessing the benefits and costs of adaptation at the adaptation measures programme level enables the combined effects of such measures to be systemically evaluated. This is not always possible when assessing the benefits and costs of individual actions. 
• The quality and quantity of national-level data on yearly adaptation budgets, costs of measures in adaptation plans and resources used for adaptation have improved in recent years. However, current data do not allow for a systemic assessment of all programmes of measures affecting a given sector or area. This emphasises the need for consistent data on the economic aspects of adaptation. 
• Current knowledge does not allow easy comparison between the costs and benefits of adaptive actions across various economic sectors. This indicates a need for methodological improvements in benefit-cost analysis.