E C O N O M I C S F O R D I S A S T E R P R E V E N T I O N A N D P R E PA R E D N E S S Climate Adaptation Costing in a Changing World Valuing climate adaptation helps us orient our compass toward effective and resilient pathways  1 © 2024 The World Bank 1818 H Street NW, Washington, DC 20433 www.worldbank.org Disclaimer This document is the product of work performed by World Bank staff and consultants. The findings, interpretations, and conclusions expressed in this document do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denomination, and other information shown in any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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ACKNOWLEDGMENTS This report was developed as part of technical assistance ‘Phase 2 – Economic Analysis of Prevention and Preparedness in European Union Member States and Countries under EU Civil Protection Mechanism’, coordinated by the Directorate-General for European Civil Protection and Humanitarian Aid Operations (DG ECHO) and other European Commission stakeholders, including the Directorate-General for Climate Action (DG CLIMA). Building on a previously implemented Phase 1 (2020–2021), Phase 2 is funded through the UCPM Multi-Annual Work Programme 2021–2024. This report was produced under Component 2, “Supporting adaptation - enhancing the evidence on costs of climate change adaptation measures.” This report was prepared under the guidance and supervision of Christoph Pusch (Practice Manager, Urban, Disaster Risk Management, Resilience and Land, Europe and Central Asia), Marina Wes (Country Director for the European Union Countries), and Sameh Wahba (Regional Director for Sustainable Development, Europe and Central Asia). It was prepared under the leadership and coordination of Zuzana Stanton-Geddes (Senior Disaster Risk Management Specialist) and Solene Dengler (Disaster Risk Management and Climate Change Adaptation Expert). Expert inputs were provided by Paul Watkiss (Senior Climate Change Adaptation Expert), Jun Rentschler (Senior Economist), Maryia Markhvida (Senior Disaster Risk Management Expert), Alan O’Connor (Senior Multi-Hazard Engineer), Zahraa Saiyed (Senior Earthquake Engineer), Stuart Fraser (Senior Disaster Risk Management Expert), Krunoslav Katic (Senior Disaster Risk Management Expert), Daniel Pele (Senior Economist), Tianyu Zhang (Climate Economics Analyst), Dimitar Nachev (Disaster Risk Management Expert), Soraya Ridanovic (Disaster Risk Management Analyst), Mikhail Sirenko (Extreme Heat Expert), Sandra Vlašic (Climate Expert), Anda Anica (Disaster Risk Management Analyst), Enock Nyamador (Risk Data and GIS expert), Momchil Panayotov (Wildfires and Forestry Expert), Daniel Johnson (Environmental Economist), and Peter Moore (Wildfire Risk Expert) The report drew on modelling outputs from the CIMA Foundation, from JBA and the Global Earthquake Model (from phase 1 Economic Analysis of Prevention and Preparedness in European Union Member States and Countries under EU Civil Protection Mechanism) and from the International Institute for Applied Systems Analysis (IIASA), related to the EDORA project. The report drew on consultations with civil protection agencies, institutional actors, and experts for the country specific case studies as well as inputs from World Bank staff. The report also benefitted from comments and guidance from Alanna Simpson (Lead Disaster Risk Management Specialist), Sachin Shahria (Environmental Expert), Raimund Mair (Senior Water Resources Management Specialist) and Chris-Philip Fischer (Senior Water Resources Management Specialist), as well as peer reviewers Thomas Farole (Lead Economist) and Emilija Timmis (Senior Economist). The team would like to express its gratitude for the cooperation and guidance of the representatives of the European Commission and all the stakeholders consulted during the report’s preparation. This report was edited by Lisa Ferraro Parmelee, Selvaraj Ranganathan, and Susi Victor. This report was designed by Ariane Kascha and Sarah Alameddine and photo imagery was provided by © the European Commission. Contents STATEMENT FROM THE EUROPEAN COMMISSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 STATEMENT FROM THE WORLD B ANK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 1. OVERVIEW OF THE LITERATURE AND METHODOLOGIES FOR COSTING CCA . . . . . . . . . . . . . . . . 40 Building blocks for costing CCA measures 43 Examples from Europe: Elements considered by countries in practice for costing CCA impacts 61 National-level planning 61 Sectoral-level planning 64 Programmatic planning 65 Lessons learned from country examples 66 CCA costs at European level: Status quo and further evidence required 69 Current evidence at EU level on CCA costs ranges 69 National-level estimates 71 Extrapolating from country evidence to the European level 73 Sectoral-level estimates 75 Chapter summary: Toward scaling up and improving CCA cost assessments 76 Summary of approaches and methods 76 Research gaps and opportunities for further studies 77 Recommendations going forward 77 2. EXPANDING THE EVIDENCE B ASE ON COSTING CCA WITH “USE CASES”: RESULTS AND LESSONS LEARNED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Overview of case studies 81 National planning assessment of CCA costs 83 Added value and comparison to external national assessments 83 New assessments and lessons learned 84 Bulgaria: Informing NAP updates with costs of measures for adapting to wildfires and extreme heat 84 Romania: Improving the evidence base for macroeconomic analytics and NAP measures 92 Sectoral and programmatic planning assessments of CCA costs 99 Added value and comparison to external national assessments 99 New assessments and lessons learned 101 Sweden: Example of adaptation costing and economic analysis for wildfire in the forestry sector 101 The fictional case study of “Aurelia”: Climate-proofing selected critical infrastructure assets 108 Croatia: Climate-proofing selected civil protection assets 113 Romania: Flood-proofing and upgrading transportation networks 116 Ways forward to enhance CCA costing evidence 122 3. CONCLUSION AND POLICY RECOMMENDATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 ANNEX 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 ANNEX 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 ANNEX 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 ANNEX 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 List of Figures Figure 1. Developing and adjusting adaptation pathways in Europe 18 Figure 2. Illustrative Lower to Upper Bound of Annual CCA Cost for the EU-27 to 2030 25 Figure 3. Annual CCA Costs Per Capita from Short-Term Policy-First National Assessments 26 Figure 4. Structure and content of the report 31 Figure 5. Map of country case studies analyzed and reviewed in the report 34 Figure 6. Linkages to EU law and efforts 36 Figure 7. Developing and adjusting adaptation pathways in Europe 44 Figure 8. “Building blocks” and flow of decisions for costing CCA measures 46 Figure 9. Benefit and Costs of Adaptation and Residual Impacts of Climate Change 47 Figure 10. Guiding principles of climate risk management for climate-proofing projects 48 Figure 11. Science-first, policy-first, and hybrid (adaptation pathways) approaches 51 Figure 12. Iterative risk management and options for early adaptation 55 Figure 13. Three types of early adaptation with strong economic rationales 56 Figure 14. Total studies reviewed by type of assessment 70 Figure 15. National-level studies reviewed by type of assessment and hazard 71 Figure 16. Annual CCA costs from short-term policy-first national assessments 72 Figure 17. Annual CCA costs per capita from short-term policy-first national assessments 72 Figure 18. Illustrative lower to upper bounds of annual CCA costs for the EU-27 until 2030 74 Figure 19. Climate risk and vulnerability in Romania compared to EU and OECD countries 93 Figure 20. Projected compounded macroeconomic impact of climate change in Romania 93 Figure 21. Romania: Estimated macroeconomic impact of extreme heat as a percentage of GDP without adaptation measures (left), and with adaptation measures (right) 98 Figure 22. Increases in agricultural losses from flood-related transportation disruptions 118 Figure 23. Investment needs and cost efficiency of resilient transportation infrastructure 119 Figure 24. Analytics for use cases informing each other 123 Figure 25. Changes in GDP in 2050 comparing the baseline and the medium impact scenario (2007 US$, millions) 184 Figure 26. Changes in GDP on agriculture and forestry in 2030, 2050 and 2070 comparing the baseline and the medium impact scenario (%) 185 List of tables Table 1. Summary of main challenges, limitations, and opportunities 27 Table 2. Annual CCA cost estimates from selected long-term science first assessments 75 Table 3. CCA Cost Estimates from selected assessments for floods 76 Table 4. Five recommendations to strengthen the climate resilience of transportation systems 121 Table 5. Overview of CCA costs at the national level found in the literature 130 Table 6. Overview of CCA costs at the global, Europe, and regional level found in the literature 141 Table 7. Overview of methodologies with their advantages and disadvantages 145 Table 8. Overview of methodologies and approaches used for case studies 147 Table 9. Overview of type of data and modelling results used for case studies 148 Table 10. Overview of CCA measures costed addressing extreme heat risks in selected sectors 150 Table 11. Overview of costs of CCA measures addressing extreme heat risks in selected sectors 154 Table 12. Overview of CCA measures costed addressing wildfire risks in selected sectors 159 Table 13. Overview of costs of CCA measures addressing wildfire risks in selected sectors 161 Table 14. Overview of selected CCA measures in Romania addressing four hazards 163 Table 15. Summary of sectoral / programmatic adaptation analytics for Romania 168 Table 16. Considerations and inputs on impacts and adaptation for macro models 186 Table 17. Examples of CCA measures considered for climate proofing of transport networks in Aurelia (non-exhaustive list) 192 Table 18. Examples of CCA measures considered for climate proofing of power networks in Aurelia (non-exhaustive list) 192 Table 19. Examples of CCA measures considered for climate proofing of selected critical infrastructure buildings in Aurelia (non-exhaustive list) 193 List of Boxes Box 1. Readers’ guide 31 Box 2. The European Climate Risk Assessment (EUCRA) 35 Box 3. Incremental versus transformational adaptation 49 Box 4. Adaptation pathway and adaptive management 53 Box 5. Considering benefits in the costing of CCA measures 57 Box 6. Deep dives into projected climate risk for wildfires and extreme heat 86 Box 7. Costing of a heat early warning system for Bulgaria 88 Box 8. Deep dives into climate risk projections for wildfire and extreme heat 95 Box 9. Portugal and Romania: Hypothetical applications of the methodology used for Sweden 107 Box 10. Heat resilience improvements to existing health care facilities in Aurelia 111 Box 11. Fire-resistant building standards for fire service infrastructure in Aurelia 112 Box 12. Projected climate-related risks and impacts on critical infrastructure 114 Box 13. Heat resilience improvements to existing buildings in Croatia 115 Box 14. Lessons learned from wildfire risk analytics considering climate projections 122 Box 15. CCA obligations under EU Climate Law 129 Box 16. Macroeconomic models commonly used and how they consider climate adaptation 182 Box 17. Fireproofing building code in Aurelia 195 ABBREVIATIONS ACAG Atmospheric Composition Analysis Group AT Apparent Temperature BASE Bottom-up climate Adaptation Strategies towards a sustainable Europe BCA Benefit-Cost Analysis CATSIM CATastrophe SIMulation CCA Climate Change Adaptation CCC Climate Change Committee CCM Climate Change Mitigation CDRI Coalition for Disaster Resilient Infrastructure CER Critical Entities Resilience Directive CES Constant Elasticity of Substitution CGE Computed General Equilibrium COACCH CO-designing the Assessment of Climate Change Costs CPEIR Climate Public Expenditure and Institutional Reviews DAC Development Assistance Committee DG CLIMA Directorate-General for Climate Action DG ECFIN Directorate-General for Economic and Financial Affairs DG ECHO Directorate-General for European Civil Protection and Humanitarian Aid Operations DG RTD Directorate-General for Research and Innovation DRG Disaster Resilience Goal DRM Disaster Risk Management DRR Disaster Risk Reduction EC European Commission EDPP Economics for Disaster Prevention and Preparedness EEA European Environment Agency EFFIS European Forest Fire Information System EM-DAT Emergency Events Database ERR Economic Rate of Return EU European Union EUCP European Climate Prediction Project EUCRA EU Climate Risk Assessment EUROSTAT European Statistical Office EWS Early Warning System GDP Gross Domestic Product HVRAs Highly Valued Resources or Assets I4CE Institute for Climate Economics  6 IAM Integrated Assessment Model IAQ Indoor Air Quality IFF Investment and Financial Flow IFFAS Integrated Forest Fire Analysis System IFM Integrated Fire Management IIASA International Institute for Applied Systems Analysis ILO International Labour Organization IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change JRC Joint Research Centre KPI Key Performance Indicator LULUCF Land Use, Land Use Change, and Forestry MFMod Macro-Fiscal Model MFSA Municipal Finance Self-Assessment NAP3 Third National Adaptation Programme NAP National Adaptation Plan NAS National Adaptation Strategy NBS Nature-Based Solution NHHAP National Heat Health Action Plan NPC Net Present Cost NPV Net Present Value NRA National Risk Assessment OECD Organisation for Economic Co-operation and Development PACINAS Public Adaptation - Investigating the Austrian Adaptation Strategy PESETA Projection of Economic Impacts of Climate Change in Sectors of the European Union Based on Bottom-Up Analysis PHIUS Passive House Certification PML Probable Maximum (Asset) Loss PNACC National Climate Change Adaptation Plan (Plan National d'Adaptation au Changement Climatique) RCM Regional Climate Model RCP Representative Concentration Pathway SDGs Sustainable Development Goals SET Standard Effective Temperature SPI Standard Precipitation Index SSP Shared Socioeconomic Pathway TRACE Territorial Risk Assessment of Climate in Regions of Europe UCPM Union Civil Protection Mechanism UCPMKN Union Civil Protection Mechanism Knowledge Network  7 UHI Urban Heat Island UNFCCC United Nations Framework Convention on Climate Change UTCI Universal Thermal Climate Index WUI Wildland-Urban Interface Note: Throughout the report, currencies have been converted to euro values. If the original values were in other currencies, this is indicated in footnotes. The currency exchange rates used in this report come from the Eurostat database (Eurostat Database 2023). All dollar amounts are US dollars unless otherwise indicated. GLOSSARY Climate change adaptation: “The process of from weather- and climate-related events can act as adjusting to live in a changing climate and making an initial proxy for the cost of not taking action to efforts to reduce the risk from the harmful impact of prevent losses and damage, both for the past7 and current or expected climate change and climate- modelled for the future (e.g. the Joint Research induced hazards.”1 Adaptation options may be con­ Centre’s Peseta IV project8).” sidered through “green” or “blue” (ecosystem-based) measures, “grey” (infrastructure-based) measures, The cost of adaptation: The “costs of planning, pre­ and “soft” (policy, legal, social, and financial) paring for, facilitating, and implementing adaptation measures.2 measures to moderate harm or to exploit beneficial opportunities.”9 Climate change mitigation: “The effort to reduce climate change and decelerate global warming The benefit of adaptation:  The value of climate through the reduction of greenhouse gas emission change damage and losses avoided by taking into the atmosphere. Mitigation can be done by either adaptation actions.10 Co-benefits of adaptation, in reducing the sources of greenhouse gases or terms of both climate extremes and slow-onset events improving the carbon sinks on Earth, which store and can include “the positive effects on biodiversity, air absorb greenhouse gases.”3 quality, water management, greenhouse gas emission reductions, and health and well-being.”11 The cost of inaction to prevent losses and damage:4 According to the EEA, “The total economic cost of The ancillary impacts of adaptation:12 Impacts that climate change in the absence of planned—with or may be “either positive (including co-benefits) or without mitigation measures.5 Essentially, it is the negative (maladaptation) and may or may not include ‘damages that will result from allowing climate cascading effects.” change to continue unabated.6 The estimated losses 1 Intergovernmental Panel on Climate Change (IPCC). 2012. “Glossary of Terms.” Link. Climate change adaptation is understood as an opportunity, bringing together opportunities to, inter alia, strengthen resilience. 2 European Environment Agency (EEA). Step 3. Identifying adaptation options. Link. 3 EEA. 2023d. What Is the Difference between Adaptation and Mitigation? Link. 4 EEA. 2023a. Assessing the Costs and Benefits of Climate Change Adaptation. Link. 5 Nicklin, H., et al. 2019. “Understanding the Costs of Inaction—An Assessment of Pluvial Flood Damages in Two European Cities.” Water 11 (4): 801. 6 Ackerman, F., and Stanton, E. 2006. Climate Change: The Costs of Inaction. Link. 7 EEA. 2020b. Urban Adaptation in Europe: How Cities and Towns Respond to Climate Change. Link. 8 Feyen, L et al. 2020. Climate Change Impacts and Adaptation in Europe: JRC PESETA IV Final Report. Link. 9 Parry, M. L. et al. 2007. Climate Change 2007: Impacts, Adaptation and Vulnerability. Link. 10 Callaway, J. M. 2003. OECD Workshop on the Benefits of Climate Policy: Improving Information for Policy Makers – Adaptation Benefits and Costs - Measurement and Policy Issues. Link. 11 Bapna, M., et al. 2019. Adapt Now: A Global Call for Leadership on Climate Resilience, Global Commission on Adaptation. Link.; World Bank (WB) and European Commission (EC). 2021. Economics for Disaster Prevention and Preparedness: Investment in Disaster Risk Management in Europe Makes Economic Sense. Link. 12 EEA 2023a.  8 Maladaptation:13 When “an intervention intended to vulnerability; and improving resilience. Disaster risk adapt a particular location or sector increases the reduction comprises both disaster prevention and likelihood of negative impacts on another location, disaster preparedness.19 sector or target group.14 Maladaptation, for example, may reduce risks in one location but increase them Disaster prevention: Activities and measures that elsewhere (e.g., downstream).”15 prevent or reduce the harmful impacts of actual or potential disasters on humans, assets, and society.20 Iterative risk management (or adaptive manage­ ment):16 An established approach for improving future Disaster preparedness: Precautionary activities and management strategies through monitoring, research, actions that enhance the capacity to reduce the evaluation, and a learning process.17 harmful impacts of and losses from potential, imminent, or current disasters.21 Disaster risk management: Processes for designing, implementing, and evaluating strategies, policies, Tipping point: A level of change in system properties and measures to improve the understanding of beyond which a system reorganizes, often in a disaster risk, foster management of risks and risk nonlinear manner, and does not return to the initial transfer, and promote continuous improvement in state even if the drivers of the change are abated. For disaster preparedness, response, and recovery the climate system, the term refers to a critical practices, with the explicit purpose of increasing threshold at which global or regional climate changes human security, well-being, quality of life, and from one stable state to another. Tipping points also sustainable development.18 may refer to impact; the term can imply that an impact tipping point is (about to be) reached in a Disaster risk management investments: Investments natural or human system.22 in risk identification (risk assessments and so on), risk reduction (through prevention), early warning, Climate variability: Variations in the mean state and emergency and response preparedness, public other statistics (such as standard deviations, the awareness, financial resilience (through the use of occurrence of extremes, etc.) of the climate on all various instruments), and resilient recovery. spatial and temporal scales beyond that of individual weather events. Variability may be due to natural Disaster risk reduction: Denotes both a policy goal or internal processes within the climate system (internal objective and the strategic and instrumental variability), or to variations in natural or anthropogenic measures employed for anticipating future disaster external forcing (external variability).23 risk; reducing existing exposure, hazard, or 13 EEA 2023a. 14 Noble, I. R., et al. 2014. “Adaptation Needs and Options.” In Climate Change 2014: Impacts, Adaptation and Vulnerability, edited by C. B. Field et al., 833–868. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the 5th Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge, UK. 15 IPCC. 2022b. IPCC Sixth Assessment Report – Technical Summary, Intergovernmental Panel on Climate Change. Link. 16 Watkiss, P. et al. 2014a. D1.2 Design of Policy-Led Analytical Framework. Link. 17 Reeder, T., and N. Ranger. 2011. How Do You Adapt in an Uncertain World? Lessons from the Thames Estuary 2100 Project. Link. 18 WB and EC. 2021a. See also UCPM Knowledge Network. Disaster Prevention and Management. Link. 19 IPCC. 2012b. Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation. Link. 20 See UCPM Knowledge Network. Link. UN Office for Disaster Risk Reduction (UNDRR). Terminology – Prevention. Link. Given ongoing discussions at EU level related to the Nature Restoration Law, nature is also considered within this definition. 21 WB and EC 2021; UCPM Knowledge Network. Lin.; UNDRR. Terminology – Preparedness. Link. 22 IPCC. Glossary. Link. 23 IPCC. Glossary. Link.  9 White, green blue measures: Solutions usually used Incremental adaptation: adaptation that maintains to mitigate urban heat island effects within cities.24 the essence and integrity of a system or process at a given scale.25 • White measures aim to counteract some of the absorption of solar radiation and heat storage of Transformational adaptation: adaptation that changes paved surfaces and built-up areas. White solutions the fundamental attributes of a social-ecological are generally “cool materials” that are generally system in anticipation of climate change and its lighter or reflect more solar radiation than impacts. 26 Linked to transformational adaptation is traditional darker materials. transformative change, which is systemwide. It goes beyond technological change through the • Green measures aim to provide cooling through consideration of social and economic factors that, with the effect of shading as well as evapotranspiration. technology, can bring about rapid change at scale.27 Green solutions include green roofs, vertical gardens, parks or urban forests. • Blue measures aim to provide cooling by evaporation, heat absorption, and heat transport. Blue measures are generally water bodies such as ponds, lakes, or rivers. They also encompass water spray from fountains, which can locally have high cooling effects because of the large contact surface between the water and air. 24 WB. 2020a. Analysis of Heat Waves and Urban Heat Island Effects in Central European Cities and Implications for Urban Planning. WB, Washington, DC. Link. 25 Mach, K. J. et al. 2014. “Annex II: Glossary.” Link. 26 Mach, K. J. et al. 2014. Link. 27 Möller, V., R. et al. 2022. “Annex II: Glossary.” Link.  10 Statement from the European Commission The impacts of climate costs has been so fragmented. The report and its case change can seem studies offer a good basis to advance in our unavoidable, overwhelming, understanding. immediate, distant, and sometimes all these things Which of the possible future climate scenarios will together. The fact is that the materialise depends on how fast global emissions will world is rapidly heating up be cut to net zero. In between, many outcomes are and Europe is warming possible, and we will need to ensure the capacity to around twice as fast as the adjust course if needed. This is another reason why global average. We have this report is so valuable: it highlights the importance seen historical temperature records being exceeded of flexible adaptation pathways and ways to develop month after month. 2023 was the warmest calendar year them. In the European Commission we consider this ever registered. These are not the type of records that we essential for making forward progress and we stand aspire to see broken. ready to significantly step up our efforts in this respect. Preparing for climatic conditions that we have never Building climate resilience is our responsibility and experienced is a challenge on many levels. Climate an opportunity to ensure our future competitiveness. risks will impact all aspects of our lives. There are The cost may be substantial, but I see them as measurable costs, such as those that take stock of investment in a safer future for the current and next the assets that have been destroyed, and there are generations. The costs of inaction are substantially the costs too difficult to quantify: how could we higher than the investment needed. Our society measure or monetise the grief for destroyed needs safe living conditions and housing, food livelihoods, species going extinct, or put a price on security, more resilient infrastructure, and losing your family’s home after a major disaster? ecosystems that continue to support us. Greater climate resilience will also spur lower economic In this climate change reality, we need to take a losses from climate related events, and more systemic approach. The good news is that this also sustainable public finances. offers an opportunity to do things better: be more resilient, agile, coherent and harness better the I am very pleased that the World Bank partnered with potential for creating economic value. the European Commission on this important endeavour – its expertise and experience are To be able to deliver we need to know how much invaluable. I am truly impressed with the climate risk management is going to cost and what comprehensiveness and depth of the analysis. economic benefits could be leveraged. This report contributes to answer some of these questions. It Building climate resilience, in tandem with tackling sheds light on the complexity of the task at hand. We emissions, is a historical challenge and a necessity. It need to be resilient in so many different areas, that is can only be achieved by working together. one of the reasons why our knowledge on adaptation Wopke Hoekstra Commissioner for Climate Action European Commission 11 Statement from the World Bank We live in a time when needs to be done, financial resources are scarce, crises have become with many urgent and often competing priorities.  normal. In Europe, the scale of loss and To respond to these challenges, focused and smart destruction from disaster investments are needed in climate adaptation and events is staggering. disaster prevention and preparedness, accompanied Recent years recorded by strengthening and adapting infrastructure, multiple concurrent institutions, societies, and finance at different levels major disasters—inclu­ of government. ding floods, wild­ fires, heatwaves, and droughts. In 2023 alone, the hottest Focused – because while Europe has been taking year on record, economic losses from disasters steps to invest in disaster and climate resilience, amounted to €77 billion across Europe.28 critical sectors, including those providing civil protection and emergency response, remain highly Europe is warming faster than any other continent in exposed. If infrastructure fails—because a fire station the world. Recent events indicate a disturbing is destroyed in an earthquake, critical evacuation trend—- ongoing global warming driving increasingly routes are flooded, or hospitals are evacuated intense climate extremes. Projections suggest that because of wildfires—people, homes and businesses economic losses from climate-related events in the cannot be saved, magnifying the impacts of an event. EU could soar to €175 billion per year in a 3°C If public financing is severely affected—or even warming scenario.29 depleted—due to the impact of major catastrophic events, the government cannot provide timely Globally—and in Europe—disasters have far- emergency, recovery and reconstruction support to reaching effects, with the vulnerable suffering the its populations and the economy. most.30 Disasters not only have a direct impact on physical assets and infrastructure, but also increase Smart – because while preventive investments poverty and exacerbate inequality over the long term. make clear economic sense,31 more can be achieved When mechanisms to prevent, prepare, respond, and using data and information to scale up prevention, recover from disasters are missing or inadequate, preparedness and adaptation efforts in a cost- these events can erode decades of development and effective, and targeted manner. In an environment deeply affect society’s welfare. of constrained resources, the region will not be able to successfully manage current and future risks Preparing for this new era of climate challenges is unless investments to prevent and prepare for critical for safeguarding the well-being of Europe's disasters are prioritized. At the same time, disaster communities and economies. Many countries in the prevention and climate adaptation efforts are closely region have set ambitious goals, which require interlinked and should be integrated to maximize substantial investment to mitigate and adapt to the the benefits of socioeconomic development and projected changes, such as the increased frequency fiscal sustainability.  and intensity of extreme weather events. While much 28 Munich Re. 2023. Record thunderstorm losses and deadly earthquakes: The Natural Disasters of 2023. Link. 29 EC (European Commission). 2020. PESETA IV. Link. 30 World Bank. 2022d. Overlooked: Examining the Impact of Disasters and Climate Shocks on Poverty in the Europe and Central Asia Region. Link. 31 World Bank and European Commission. 2021. Economics for Disaster Prevention and Preparedness: Investment in Disaster Risk Management in Europe Makes Economic Sense. Link. 12 At the World Bank Group, we are modernizing our Building on results generated in 2021,32 this set of mission and instruments to ensure better support to reports provides new evidence, tools, and examples countries globally and in Europe. In the region, the for countries in Europe to strengthen their disaster World Bank Group has been strengthening and climate resilience in a focused and smart manner. partnerships, providing financing and sharing By highlighting aspects such as prioritized decision- knowledge to help communities manage the risks of making, understanding the costs of climate change, disasters and climate change. Among these efforts, and risk-informed budgeting, these reports can be we support countries to modernize their policy and instrumental in developing and implementing strategic frameworks, and prioritize, design and nuanced policies and strategic investments that are finance investments that strengthen disaster and attuned to the diverse hazards facing Europe. By climate resilience, including in critical infrastructure embracing such new tools and approaches, we can and emergency response services. ensure that communities are more resilient in the face of ever-evolving climate impacts and help secure This series of analytical reports, produced as part of a a sustainable future for generations to come. partnership with the European Commission, attests to our commitment. Antonella Bassani Vice President, Europe and Central Asia World Bank 32 World Bank and European Commission. 2021. Economics for Disaster Prevention and Preparedness. Link. 13 Executive Summary The impacts of climatic shocks are already being felt than any other global region,33 with economic losses across Europe and are bound to intensify in line with mounting precipitously. From 1980 to 2022, weather further climate change. Even rapid and far-reaching and climate-related events across the European progress on decarbonization cannot avoid the extent Union caused total losses of about €650 billion, or of climate change that is already locked in due to around €15.5 billion per year.34 Under climate past emissions. These trends call for urgent climate change, annual economic losses are projected to rise adaptation investment strategies that can prepare significantly from these levels; for example, under a countries for a wide range of climate hazards and high emission scenario, EU GDP could be 7 percent their complex impacts across communities and lower than in the baseline by a conservative economic sectors. However, formulating concrete estimate.35 Across all scenarios, losses could reach investment strategies can be challenging as 2.2 percent of GDP by 2070, and one-quarter of EU adaptation needs are vast and difficult to estimate. To regions could experience GDP losses greater than overcome this challenge, this report reviews 5 percent, noting that these estimates do not take evidence-based prioritization and costing approaches tipping points into account.36 Europe will have to deal and illustrates their application in a series of case with more frequent and intense climate events37 that studies. These approaches can support policy makers stretch preparedness and response capacity and will in identifying bankable and effective adaptation need to promote structural changes to deal with investments, raising and allocating adequate systemic impacts on all economic sectors.38 Evidence financing, and thus ultimately facilitating more suggests the continent is unprepared for the larger effective climate change adaptation across Europe. disasters already being experienced, as illustrated by the losses from floods in 2021 (more than €40 billion in Germany),39 drought in 2022, and increasingly Why Europe needs to adapt to and mitigate disruptive seasonal heatwaves and wildfire seasons. climate change at the same time Immediate action is required, both for climate Europe urgently needs to scale up investments in mitigation and climate adaptation, starting now and climate adaptation. The continent is warming faster building into the future. Climate change adaptation 33 World Meteorological Organization (WMO) and Copernicus. 2022. State of the climate in Europe report. Link.; Pörtner, H.-O. et al. 2022. Climate Change 2022: Impacts, Adaptation, and Vulnerability. Link.; European Environment Agency. 2024. Europe is not prepared for rapidly growing climate risks. Link. 34 EEA 2023e. 35 GDP reduction by end of century; “Over the period 2031-2050, the cumulative additional GDP cost of a pathway leading to worse global warming could amount to EUR 2.4 trillion in the EU, compared to the costs under a pathway compatible with the 1.5°C objective of the Paris Agreement.” EC. 2024. Europe’s 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society. Link. 36 Bosello et al. 2020. D2.7. Macroeconomic, spatially-resolved impact assessment. Deliverable of the H2020 COACCH project. Link. 37 Kovats, R. S., et al. 2014. “Europe.” Link. 38 European Environment Agency. 2024. Europe is not prepared for rapidly growing climate risks. Link. 39 Prognos. 2022. Extreme weather damages in Germany since 2018. Link. 14 (CCA) is essential not only to bolster climate resilience Restoration Law presently under discussion.43 The EU and curtail losses but to reap additional socio­ is committed to disaster resilience through initiatives economic and environmental benefits. It is that include, notably, the EU-wide Disaster Resilience complementary to climate change mitigation (CCM), Goals (DRGs), which set four key priority areas for the as the next twenty years of climate change are already European Commission (EC) and the Member States. locked in, and early action is needed to prepare for At the national level, EU Member States have also the possible larger changes that will follow. The committed to accelerating efforts toward disaster potential for adaptation is limited, however. Soft limits prevention and preparedness and CCA through apply where current approaches may be insufficient disaster risk management (DRM) and CCA plans, as and scaling up is needed to overcome constraints, well as legislation in line with EU and international while hard limits require very different and more standards and agreements. Opportunities exist to transformational adaptation. Adaptive capacity may, translate this commitment into effective and feasible indeed, decrease or be insufficient to cope with the forward-looking actions, such as increasing the scale of change needed, depending on interactions funding available to tailor and integrate CCM and CCA between socioeconomic and climate scenarios and interventions. on residual impacts that could be substantial, particularly affecting vulnerable people and Acting on both climate mitigation and adaptation is communities. Even under a best-case 1.5°C degree economically beneficial and provides broader social warming scenario, certain global, climate, and and environmental benefits. Together these actions socioeconomic tipping points40 may already have can reduce direct losses resulting from disaster and been reached. With warming between 2° and 4°C, ten climate impacts while enhancing growth and of sixteen climate tipping points (five global and five providing trade and job opportunities, productivity regional)41 could be reached; these include a gains, emission reductions and air quality significant ice loss in the Barents Sea and an ice-free improvements, ecological value, and biodiversity. Arctic, which would have a direct impact on Europe.42 Studies show that adaptation can, for example, be extremely cost effective in reducing economic losses The commitment of the EU and its Member States to from climate change–related coastal and river CCM and CCA is enshrined in and empowered by an floods.44 A recent report from the World Bank and the underpinning framework. At EU level, this commit­ EC reviewing more than seventy investments across ment is anchored in several different legislative Europe has also shown that investments with a frameworks, strategies, and action plans, particularly portfolio of measures addressing disaster risks can the European Climate Law, the Green Deal, including deliver high benefit-cost ratios and a triple dividend, the EU Adaptation Strategy, as well as the Nature with numerous co-benefits.45 40 IPCC. WGII AR6 full report. Link; GSI. 2023. Global tipping points report. Link. 41 “Regional” is meant to cover the Europe region as aligned with climate models; “cross-country” is used, where suitable, to clarify. 42 McKay et al. 2022. Global warming exceeding 1.5°C could trigger multiple climate tipping points. Link. 43 EC. 2023. Nature Restoration Law. Link. According to the EC, investment into nature restoration adds €8 to €38 in economic value for every €1 spent, thanks to the ecosystem services that support food security, ecosystem and climate resilience and mitigation, and human health. 44 Lincke et al. 2018. D2.3. Impacts on infrastructure, built environment, and transport Deliverable of the H2020 COACCH project. Linkä; Lincke and Hinkel. 2018. Economically robust protection against 21st century sea-level rise. Global Environmental Change 51, 67-73. Link. 45 The triple dividend of resilience investments includes saved lives and avoided losses (dividend 1), induced economic and development benefits (dividend 2), and environmental and social benefits (dividend 3). Benefit-cost ratios typically ranged between 2 to 10. World Bank. 2021a.; Tanner et al. 2015. The Triple Dividend of Resilience. Link.  15 What actions are required to create effective the policy question at hand. The approach for costing adaptation pathways? a national adaptation program, for instance, differs from that for climate-proofing infrastructure. Some Scaling up investments in climate adaptation underlying principles remain constant, however. requires more and better information on their costs. Developing adaptation pathways begins with the A knowledge gap regarding the costs of CCA at evaluation of existing climate risks, adaptation national and EU levels inhibits countries from taking investments, and the effectiveness of current timely actions, making decisions about CCA measures. It then considers a broad spectrum of investments, and scaling up finance (public and potential climate consequences and the variety of private) to address the current adaptation gap. In the adaptation options available. This process is meant 2023 reporting required by the regulation 2018/1999 to enable the management of climate impacts from EU Member States to the Commission through adaptively and iteratively, thereby supporting the EEA platform.46 Member States noted substantial “decision making under uncertainty” (DMUU) technical and resource constraints on developing approaches. Adaptation pathways mostly set a broad comprehensive climate risk assessments and studies strategic direction (see Figure 1), while the more for CCA costing, as well as on the development of detailed adaptation programs and measures following better tagging and reporting systems on climate that direction need to be developed using the various adaptation expenditures. By enhancing the tools, methods, and information outlined in this knowledge base of methodologies and evidence on report. Identifying and assessing the actions to be CCA costing, this report can support the Member taken for adaptation is crucial, taking into account States in their process of CCA costing, identifying their timing, the breadth of the climate impacts adaptation funding gaps, and implementing CCA projected, and the urgency of implementation. While expenditure tagging. cost-benefit analyses of CCA measures are valuable, they should be supplemented with considerations of Adaptation pathways can be effectively developed the urgency of decisions and path dependency—that by combining information on current and future is, the effect of decisions or events on subsequent climate risks with multidisciplinary expertise. The decisions and events.  framework for adaptation pathways varies based on 46 EC. 2018. Regulation 2018/1999. Link. EEA. 2023. Is Europe on track with climate resilience? Link. See also Leitner, M. et al. 2023. Technical paper. Link.  16 Figure 1. Developing and adjusting adaptation pathways in Europe DEVELOPING AND ADJUSTING ADAPTATION PATHWAYS (Setting, orienting, and recalibrating the compass) Source: World Bank team inspired by the IPCC graphic in IPCC AR6 WG2 report. Link CLIMATE RESILIENT DEVELOPMENT 2100 lower warming / higher climate resilience higher warming / lower climate resilience 2050 major events / new evidence causing the re-evaluation of adaptation plans and measures adjustment of adaptation pathways 2030 following trigger points (green/red is associated with more/less options to adjust adaptation pathways and more/less possibili- ties of pathways with lower climate impacts when concurring with stronger/less mitigation 2024 and lower/higher warming scenarios) OBJECTIVE: National Adaptation Plan with costed measures up to 2030 for time horizons 2030s - 2050s Consolidated adaptation pathways National and sectoral adaptation strategies for all sectors considering: • current climate risks and possible no- or low-regret measures • future climate risks and near-term decisions with long lifetimes • starting transformational adaptation and more complex decisions considering the need for systemic changes of sectors for the future protection and Other sectors management Health, social development Environment Forestry and Disaster risk Agriculture and Energy education Transport Urban Water Trigger points and adjustment examples: • Flood protection measures failing as • Higher financial losses due to wildfires • Heat related mortality crossing frequency and intensity increasing -> -> adapting forestry practices and scaling thresholds -> adjusting labor changing flood protection measures up wildfire prevention measures protection laws to protect workers (more di cult with hard infrastructure)  17 Source: World Bank team inspired by the IPCC graphic in IPCC AR6 WG2 report. Link. Building resilient futures in the face of evolving Looking ahead, countries will need to start shifting climate risks, including compound, multi-hazard, from studies to inform incremental adaptation to and disruptive events, requires developing ones that will enable transformational adaptation. comprehensive investment packages for CCA and Incremental adaptation, on which studies—including DRM with a mixture of options that evolve along adaptation costing studies—have focused to date, with them. Such investment packages should be aims to maintain current activities and systems. justifiable in economic terms through a combination Transformative adaptation (which involves scaling of early benefits (‘no regrets’ options), while also up) and transformational adaptation (which involves minimizing lock-in, and enabling early action for moving to different activities or systems) will require longer term objectives (option value47). National going beyond existing approaches toward more adaptation plans (NAPs) often include an extensive strategic analysis and systems thinking, as highlighted list of broad adaptation measures without in the EU Adaptation Mission, taking into account the prioritization or sequencing. These plans provide a long lead times for planning and the likely need for foundation for more detailed sectoral studies, societal and governance change.48 Changing coastal incorporating pathway thinking and moving to climate risks, for example, which may necessitate investment planning. major changes in land use, settlements, and activities, may also require the alteration of institutional and Effective adaptation will require more support for governance structures to deliver societal change.49 developing sectoral adaptation studies and Interest is increasing in systems approaches to financing strategies. Such studies are essential to addressing such complex and multi-objective policy inform better and more targeted CCA in sectors and issues as transformational adaptation. A range of updates of NAPs over time, as well as financial methods is being piloted, including social network planning for sectoral agencies, line ministries, and analysis, systems dynamic modeling, and others.50 ministries of finance. Acknowledging adaptation as While these can be useful for mapping risks, their an ongoing process means moving beyond lists of application to adaptation is both complicated and technical options and employing a portfolio approach time and resource intensive. as outlined above, blending nontechnical and technical solutions, and creating the enabling conditions for adaptation at the sectoral or national How do we finance and implement adaptation level. To set the response to short- and long-term plans? challenges, this process must also be iterative and dynamic. While work on these pathways has been Adaptation costing studies spur important multi- most advanced for sea-level rise and coastal policy, stakeholder dialogues and inform policy discussion, the same concepts apply to other environmental planning, and budgeting for mainstreaming and issues—for example, to enhancing the resilience of scaling up CCA. Across the EU, such costing forest ecosystems. processes have helped raise awareness, initiate national discussion, support decisions, and improve systems to monitor and track progress on CCA. 47 An ”option value” can be understood as a premium individuals are willing to pay for the reduced risk.; Haveman, R.H. and D.L. Weimer. 2001 Cost–Benefit Analysis. Editor(s): Neil J. Smelser, Paul B. Baltes. International Encyclopedia of the Social & Behavioral Sciences. Pergamon. Pages 2845-2851. Linkä 48 IPCC. 2018. Annex I: Glossary. Link. 49 ClimateReadyClyde. 2020. Resilient regions: Clyde Rebuilt. What does transformational adaptation look like? Link. 50 Martinez-Hernandez. 2022. System dynamics modelling and climate change adaptation in coastal areas: a literature review. Link.; Zarghami and Dumrak. 2021. A system dynamics model for social vulnerability to natural disasters: disaster risk assessment of an Australian city. Link.  18 They have contributed to mainstreaming CCA into Importantly, generating revenues can be more line ministries’ plans, while the more complex difficult for adaptation than for mitigation investments; assessments have sought to determine the relatedly, it is easier to finance no-regret and effectiveness of measures to be selected, prioritized, incremental adaptation and more challenging to and implemented. In Austria and Germany, decade- finance anticipatory and transformational adaptation. long adaptation studies with multiple building blocks This means public sources of finance will need to be revealed a need for better expenditure tracking at scaled up, which is important for the public investment both national and local levels to improve financing for strategies and medium-term budget plans. adaptation; these studies took note of the substantial Adaptation costing studies provide the initial costs and benefits that could also be expected at the information needed for all of this and can be further macroeconomic level and highlighted possible applied to adaptation investment planning and synergies between CCM and CCA investments.51 financing. An opportunity also exists for private Studies in France, focusing on low-regret measures in investment in some areas (such as market sectors the short term, have informed the next National and regulated sectors), although it presents questions Financial Budget Strategy and longer-term financial as to who pays for the adaptation and how the burden and fiscal planning based on various climate can be equitable. scenarios. France has also begun preparations for a 4°C world based on the national debates that informed the updating of the National Adaptation Policy recommendations and ways forward for EU Plan in 2023. Such preparations represent a starting Member States point for larger-scale systemic changes and the setting of pathways for more transformational Adaptation is “everyone’s business.” Continuous adaptation.52 dialogues are required to mainstream and coordinate adaptation across sectors, including in planning, Adaptation can be more difficult to finance than financial, and fiscal strategies, and to promote more mitigation, which presents an important role for the ambitious and comprehensive sectoral strategies to public sector to play in addressing financing barriers enhance resilience. CCA studies provide a basis for and creating an enabling environment. While global more specific costing of adaptation measures within and European climate finance flows are now large, broader programs or investment portfolios, informing they are dominated by mitigation; the flows to prioritization among measures and over time by adaptation are small and mainly from public enabling identification of synergies and potential sources.53 This means a large gap exists in Europe tradeoffs and determination of the feasibility of between the amount needed for adaptation and the measures with current or increased budgets. current finance flowing. To fill it, a major scale-up is Integrating adaptation into short- and long-term needed of public, private, and blended adaptation financial and fiscal strategies is also essential to finance, involving new actors, new models, and new discern the implications for the public finances, both financial instruments. Several challenges are posed, for near-term spending plans (that is, for the next five however, by barriers and constraints to adaptation years) and over the longer term, alongside other that include information gaps, market failures, and pressures. The benefits of investing early (and obstacles related to bankability, policy, and regulation, proactively) also must be compared to the higher as well as broader social and cultural conditions. costs of acting later (and reactively). 51 Tröltzsch, J., et al. 2012. Link.; IÖW. 2021. Link.; Knittel, N., et al. 2017.Link; Government of Austria. 2022.Spending Review im Rahmen des Aufbau- und Resilienzplans - Modul 1 „Analyse der klima- und energiepolitischen Förder- und Anreizlandschaft“.Link.; Eichberger, S., et al. 2023. Budgeting for Climate Action: Lessons from Austria, France, and the European Union. Link. 52 Depoues et al. 2022.; Alexandre, S., et al. 2019. Link.; Eichberger, S., et al. 2023. Budgeting for Climate Action: Lessons from Austria, France, and the European Union. Link.; I4CE. 2023. Economic implications of adaptation pathways (upcoming). Link. 53 Climate Policy Initiative. 2023. Global landscape of climate finance 2023. Link.; Frontier Economics. 2022. Barriers to financing adaptation action in the UK. Link.  19 Institutional actors can help shift the thinking on managing risks and sectoral programs, it can be adaptation from its being an environmental issue to useful to encourage cross-ministry working. This can a finance and planning one, with responsibilities help in identifying “soft”—that is, policy, legal, social, assigned across all ministries. More broadly, such and financial—measures, such as early warning, dialogue requires coordination across ministries, which are low cost but can reduce impacts agencies, and institutes and for policies influencing significantly, alongside hard options, such as resilience such as spatial planning to be considered at enhancing infrastructure resilience, to provide national and cross-border level. The 2023 EEA report complementary packages of measures. Also essential on adaptation progress has identified national to consider for all programs are green design features adaptation networks, panels, and committees as key and nature-based solutions, given the high potential to helping Member States with horizontal policy for economic co-benefits and, especially, the integration, multi-level coordination, scaling of potential provided by mixing “green” (ecosystem- adaptation actions, progress evaluation, and based) with “grey” (infra­structure-based) measures.55 coordination through knowledge networks.54 These entities can review evidence regularly to inform Countries can improve their national climate risk updates of NAPs and review progress on adaptation assessments and national adaptation plans and investment and remaining gaps. They can also be programs in parallel. While granular and downscaled responsible for member state reporting to the EC on assessments of future climate risks, even at the adaptation progress, as required under the EU Climate regional level, can provide useful information, Law. Finally, these national coordinating entities can priorities for early adaptation measures should start be connected to European and cross-country expert with an analysis of risks under current climate networks to ensure they have access to the latest conditions. Climate risk and impact analytics are key evidence from other countries on modeling, and must be grounded in historical and observed methodologies, climate risk analytics, and CCA costing. information to support the better identification of early CCA measures, the timing and prioritization of Countries have to adapt to both climate stressors measures, and the calculation of potential early and shocks, and the dots between disaster risk benefits. Climate projections can then be used, but management and climate adaptation programmes the analysis must take note of the wide spectrum of should be connected. In practice, this means possible outcomes from future climate impacts breaking down the silos and encouraging cross- derived from warming scenarios and climate (and sectoral collaboration to create synergies and impact) modeling. As this complexity makes it difficult streamline efforts. A concrete example is the creation to define precisely the required levels of adaptation, of effective forest and environment strategies through future risk pathways and an adaptive management interdisciplinary and cross-institutional discussions. approach to address them must be considered. Reconciling views and openly discussing tradeoffs is Historical hazard analytics, including national risk complicated but necessary to ensure investment assessments (NRAs), as well as extreme scenarios programs can support multiple goals, including and national studies, are needed alongside more climate change mitigation and resilience. Another traditional future-oriented climate change studies, example is adaptation to heat, which requires such as TRACE, PESETA IV, and upcoming EUCRA coordination among health, building, and urban results.56 Moreover, simple yet rapid exposure and planning policies, as well as with labor policy. vulnerability assessments can contribute timely Although NAPs often follow the structures of line evidence to raise awareness of the need for more in- ministries, recognizing existing mandates in terms of depth exploration of risks. 54 EEA. 2023c. 55 WB. 2023. Assessing the Benefits and Costs of Nature-Based Solutions for Climate Resilience: A Guideline for Project Developers. Link.; WB. 2019. Integrating Green and Gray: Creating Next Generation Infrastructure. Link. 56 TRACE = Territorial Risk Assessment of Climate in Regions of Europe.  20 Countries can undertake CCA costing at different level. Results from this research also helped with the levels of analysis to serve different policymaking determination of adaptation costs of approximately objectives. At the most aggregated level, macro-level €7 billion for Bulgaria over the next five years. assessments of its costs can support advocacy for CCA by demonstrating that the benefits exceed the The studies presented here can enrich national costs at the country level, not just at the programme dialogues on multi-hazard investments and financial and investment level. Such assessments can be resilience, as well. For Sweden, the analysis focused complemented by CCA expenditure tracking, or on prioritizing and costing a set of early actions for climate budget tagging. To support the development the forestry sector to address the rising risk of of effective CCA contingency plans and financial wildfires, including potential no-regret options, resilience instruments, assessments can also take interventions to address lock-in risk, and early into consideration extreme scenarios for civil adaptation pathway actions, all of which could be protection and Union Civil Protection Mechanisms justified based on their net economic benefits. (UCPMs) and results from macroeconomic and Findings for Croatia on climate proofing underscore macro-fiscal analysis. At the sector level, the significance of infrastructure upgrades in future mainstreaming of CCA costing in medium-term programs and the importance of a national dialogue planning and budgeting by ministries of finance, line on managing multi-hazard risks, while initial estimates ministries, and locally is useful for improving policy of €123 million to €491 million for climate proofing and financial planning for CCA. At the level of Romania’s transportation networks against flood directorate-generals or line ministries in particular, risks enhance the knowledge base for future in-depth more in-depth analysis of climate risks and CCA multi-hazard assessments. Together, these studies options and costs can be integrated into strategies offer a comprehensive roadmap, informing both and plans to support prioritization. At the most sectoral strategies and national adaptation plans for detailed level, decision support tools and costing countries embarking on CCA. methods can be used to look at individual programs, projects, or investments. Policy recommendations and ways forward for the Lessons from various EU countries provide European Commission invaluable insights for better planning and budgeting for CCA. National planning studies like those in The implementation of the EU Adaptation Strategy France, which estimated early adaptation costs at and the Green Deal can be spurred by providing around €2 billion annually in this decade, have more support to countries for identifying bankable influenced short-term financial strategies as well as and effective adaptation investments. While many medium- and long-term planning. Austria’s estimate EU Member States reported improvements in of €421 million to €573 million and Germany’s of capacity and the status of national adaptation actions €140 billion to €142 billion annually, were the in 2023, several finance-related challenges persist. conclusion of years of collaborative research. The These include assessing the cost of adaptation; studies highlighted the pressing need for improved immaturity of monitoring, reporting, and evaluation expenditure tracking and a better understanding of systems for implementation and financing; lack of a broader macroeconomic implications to further common methodology to assess costs and track improve such estimations. The new case studies financing; absence of dedicated budgets or financing undertaken in this report provide additional insights. streams for implementing adaptation strategies or In Romania’s NAP draft document, overall estimates plans; and limited availability of dedicated adaptation of CCA measures amount to €19 billion until 2030, funds for financing implementation (it is worth noting, and its study helps illuminate approaches for however, that some countries have reported having estimating costs and benefits at the macroeconomic such dedicated funds or portions of funds to finance  21 national or sectoral adaptation actions).57 The public Continued support from the EU will be essential to sector needs to increase finance for adaptation and the effective use of climate risk information in the deploy it more innovatively—for example, by development of adaptation strategies and plans. considering new financial instruments and helping to The EU is already developing and sharing climate risk “de-risk” private investment. The public sector can analytics through the EUCRA, for example, and also help by creating the enabling conditions needed through such research initiatives as COACCH and by the private sector in terms of information, capacity, PESETA. Further knowledge sharing could be helpful, policy environment, and incentives. Finally, Member especially the provision of more information on States need to begin moving from lists of adaptation adaptation costs and benefits. In addition, more options to costed plans, and beyond this to adaptation tailored capacity building could support the use of investment planning and financing, starting with the rich EU datasets and climate impact assessments to identification of bankable pipelines of investments inform NRAs, sectoral and adaptation studies, and, and proceeding to the development of financing ultimately, NAPs to scale up adaptation. While strategies. The EC can provide more support to improved risk analytics will be useful, however, they countries for identifying bankable and effective will not resolve the complexity of potential climate adaptation investments to spur the implementation impacts; adaptation decision-making will need to of the EU Adaptation Strategy and the Green Deal, continue relying on the adaptive management building on initiatives as the Mission on Adaptation approaches above for the foreseeable future. and dialogues on mobilizing climate resilience financing.58 EU support and cooperation can enable the uptake of CCA costing assessments. With increasing Dialogue with ministries of finance can support the climate risks, adaptation will need to be scaled up development of effective short- and medium-term at all levels, from European down to local, and will financial and fiscal strategies that consider call for an expansion of investments and an increase adaptation to climate change. Stress tests have been in CCA costs. The benefits of improving the practice conducted on the potential impacts of climate change and uptake of costing studies to enhance the on Member State public finances, including on efficiency and effectiveness of adaptation decision- indicators such as debt to GDP levels.59 These tests making will be EU-wide. Databases of the costs of have determined that climate change may pose risks CCA measures, case study examples of costs and to fiscal (debt) sustainability in some countries, and benefits, and efforts to provide support for costing further dialogue with ministries of finance is important methods could result in quicker and more robust to managing them. Several countries are undertaking assessments and, in turn, improve the value-for- climate budget tagging and looking at the possible money of adaptation delivery. They could also provide effects of adaptation on spending plans and the a practical starting point while more country-specific, public finance. Adaptation costing studies can tailored, and granular assessments are becoming contribute to such analysis and encourage investment available. A menu of tools are already available for by demonstrating the benefits of early adaptation instance on managing climate risks.60 investment and how it can reduce fiscal risks. 57 Leitner, M. et al. 2023. Technical paper. Link. 58 EC. 2024. Managing climate risks - protecting people and prosperity. Link. 59 The EC Fiscal Sustainability Report 2021 (DG ECFIN) included an extreme event stress test to assess the risks to public finances—a first step in policy readiness. The results led to the conclusion that climate change may pose risks to fiscal (debt) sustainability in some countries, although these were reported as remaining manageable under (low) global warming scenarios (European Commission. 2021. Fiscal sustainability report 2021. Link.). 60 EC. 2024. Managing climate risks - protecting people and prosperity. Section 3.2. Tools for empowering risk owners. Link.  22 The EU could also provide tailored assistance with making comparisons, scaling, and replicating cost the implementation of relevant EU laws and analytics are more challenging for CCA than for policies,61 such as the EU Climate Law62 or the climate change mitigation (CCM). Past assessments, Nature Restoration Law when adopted. This may like PESETA IV and COACCH, have offered sector- include, for instance, ways to integrate effectively specific climate impact estimates, with limited NBSs and a mixture of grey and green solutions in analysis of CCA costs and benefits in a few sectors.64 investment packages across Europe, as aligned with This report derives illustrative short-term adaptation the EU’s flagship climate and nature policies and the costs for the EU-27 based on national studies Green Deal. These solutions are often highly context- (Figure 2).65 Costs are estimated at €15 billion to €64 specific and complex to determine and implement, billion per year until 2030, with a ”central” estimate and they could be promoted more comprehensively of €21 billion extrapolated on a per capita basis based in sectors such as agriculture or forestry. For example, on a study for Austria that yielded costs of adaptation in preparation for the Nature Restoration Law when in the median range of those found across existing adopted, the EC may consider providing tailored studies for Europe.66 These estimates may be lower assistance across EC services to support subsequent bound as a result of gaps in sectoral and hazard measures to support the implementation of coverage and the ranges of projected climate change obligations at the EU and national levels.63 impacts. While these estimates are indicative, their magnitude can help to highlight the scale of This analysis produces some plausible and indicative adaptation finance that may be needed and equate CCA cost estimates for the EU-27 for the short term to between 0.1 and 0.4 percent of EU GDP, and a (until the 2030s) by extrapolating from existing much higher proportion of the public budget. This national studies. No recent quantified comprehensive indicates finance flows need to be scaled up and consolidated estimates of CCA costs exist at the significantly. EU level. Estimating costs at the regional level and 61 Such as the DG REFORM’s Technical Support Instrument with support based on flagship themes and beyond for single or multi-country engagements. 62 The EU Climate Law requires that Member States integrate adaptation in all policy areas and promote NBS and ecosystem-based adaptation. 63 EC. 2023. Nature Restoration Law. Link. According to the EC, investment into nature restoration adds €8 to €38 in economic value for every €1 spent, thanks to the ecosystem services that support food security, ecosystem and climate resilience and mitigation, and human health. 64 Lincke et al. 2018. D2.3 Impacts on infrastructure, built environment, and transport Deliverable of the H2020 COACCH project. Link.; Lincke and Hinkel. 2018. Economically robust protection against 21st century sea-level rise. Global Environmental Change 51, 67–73. Link. 65 Based on national studies for France, Austria, Romania, and UK, with respectively underlying figures from the following studies: Depoues, V. et al. 2022. Se donner les moyens de s’adapter aux conséquences du changement climatique en France: De combien parle-t-on? Link; Knittel, N. et al. 2017. The Costs of Climate Change Adaptation for the Austrian Federal Budget. Link.; Government of Romania. 2022. Extract from the National Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030; and Watkiss, P. 2023. The Costs of Adaptation, and the Economic Costs and Benefits of Adaptation in the UK. Link. 66 Jeuken, A., et al. 2016. EU-wide Economic Evaluation of Adaptation to Climate Change. Link; De Bruin, K., et al. 2009. “Economic Aspects of Adaptation to Climate Change: Integrated Assessment Modelling of Adaptation Costs and Benefits.” Link.  23 Figure 2. Illustrative Lower to Upper Bound of Annual CCA Cost for the EU-27 to 2030 Lower bound indicative EU wide estimate Central bound indicative EU wide estimate Upper bound indicative EU wide estimate 15 Billion/year 21Billion/year 64 Billion/year Italy, 2.0 Spain, 1.6 Italy, 4.1 Spain, 3.3 Germany, 2.8 Germany, 5.8 Germany, 11.9 Italy, 8.4 France, 2.3 France, 4.7 France, 9.7 Spain, 6.8 Extrapolation to EU27 with Extrapolation to EU27 with Extrapolation to EU27 with French national CCA cost Austrian national CCA cost Romanian national CCA cost estimate as a basis and estimate as a basis and estimate as a basis and per capita adjustment per capita adjustment per capita adjustment per country per country per country French national CCA cost estimate Austrian national CCA cost estimate Romanian national CCA cost estimate (Depoues et al. 2022) (Knittel et al. 2017) (NAP 2023 – draft being approved) Source: World Bank; Based on Depoues et al. 2022, Knittel et al. 2017, and Government of Romania 2023. Note: EU-wide estimates are extrapolated from single-country estimates. The left panel of the figure presents a lower-bound estimate of annual CCA costs for the EU-27 (for no-regret adaptation only) for this decade, extrapolated on a per capita basis from the French study (Depoues, V. et al. 2022). The middle panel presents a central estimate of CCA costs per year for the EU-27 for this decade, extrapolated on a per capita basis from the Austrian PACINAS study (Knittel et al. 2017). The right panel presents an upper-bound estimate of CCA costs per year for the EU-27 (for no-regret adaptation only) this for decade, extrapolated on a per capita basis from the drafted Romanian National Adaptation Strategy and Action Plan (this is preliminary, as the NAP is not finalized or approved). These values do not take account of vulnerability or risks in scaling up from the national level and can only be considered indicative. As EU-level CCA estimates are highly aggregated and scenarios, future risk levels, and objectives, stylized, countries are urged to undertake detailed, assumptions, and methods—these figures are not contextualized national assessments rather than directly comparable. Nonetheless, useful insights can relying solely on approximate regional assessments. be gained by comparing results from various Cross-country comparison of CCA costs is challenging. approaches. Sectoral- or program-based CCA costing Unlike mitigation, CCA has no quantified global or EU exercises can allow some comparability if similar objectives. This means any analysis has to decide what methodologies are used, while CCA options can also these objectives should be and the balance of the sometimes be compared using results from societal benefits and costs of adaptation, as well as the benefit-cost analysis.68 Based on existing country “acceptable residual impacts” after CCA. Adaptation studies of CCA costs in per capita terms, costs range costs for objectives differ based on economic from around €34 per person per year in France to €64 efficiency, acceptable levels of risk, or risk minimization. in Austria and €110 in Slovakia as central values, and Existing estimates from individual countries vary €3 in Estonia to €174 in United Kingdom considering between €3.96 million and €11.6 billion per year, with extremes. This indicates very different approaches or large disparities in their coverage of risks and sectors coverage and suggests a need for countries to (see Figure 3).67 Because the differences stem from undertake detailed national assessments to produce three sets of assumptions—time periods and more robust estimates. 67 Estimates are adjusted to 2022 euros and are in annual terms and, thus, may vary from original values in the literature. See Annex 1 for original values. 68 WB and EC. 2021a. Link.  24 Figure 3. Annual CCA Costs Per Capita from Short-Term Policy-First National Assessments Country 200.00 173,78 180.00 160.00 142,54 140.00 120.00 110,22 100.00 Eur 79,07 80.00 46,89 52,58 63,82 60.00 33,89 40.00 6,54 20.00 2,97 0.00 Estonia Spain France Austria Croatia Austria UK Slovakia Romania UK (bottom-up (top-down (minimum (full action) approach) approach) action) Source: World Bank; see Table 5 in Annex 1. Note: CCA cost estimates differ from the original unit values in Table 5 in Annex 1. Values are produced in 2022 euros and in per capita terms by dividing the cost estimate by the countries’ populations (data obtained from EC. 2024. EU, Eurostat Database).69 Bulgaria is not included in this figure, as the study (Republic of Bulgaria 2019)70 provides CCA cost estimates per adaptation option and is thus not comparable with the other studies, which assess CCA costs at the national level in annual terms. Limitations and considerations for future research expertise. The use cases presented illustrate adaptation from different perspectives (national, This report is limited in its scope and needs to be sectoral, and programmatic), and the literature is considered in the context of broader CCA debates referenced for further insights. and studies. Evidence on costs of CCA measures in terms of sectors and hazards is limited,71 and the Finally, the key issue of who should bear the costs for types of measures covered (such as hard structural CCA and investments is only touched upon in this versus soft behavioral change as adaptation report, but it will be crucial for future adaptation. To response; policy measures; and so on) call for in- date, adaptation has been largely undertaken by the depth study. This report focuses on hazards, sectors, public sector, but, given the adaptation finance gap, and “use cases”72 that are generally less covered in the private sector and households will clearly need to the literature, concentrating on, for example, wildfires contribute. Beyond methodological aspects, the and heat adaptation, as opposed to flood risk or public/private split of investments requires sectors such as transportation and building upgrades. consideration of national legislation and much more It also focuses mainly on countries of southeastern detailed adaptation studies. The subnational Europe that were selected at the beginning of this responsibilities and implementation of investments project based on criteria that included the added also are not explored in this report in detail; other value of analytics, existing dialogue with the countries, types of studies are needed on subnational variations and access to climate risk analytics and local in impacts, appropriate localized adaptation 69 EC. 2024. EU, Eurostat Database. Link. 70 Republic of Bulgaria. 2019. 71 Organisation for Economic Co-operation and Development (OECD). 2008. Economic Aspects of Adaptation to Climate Change Costs, Benefits and Policy Instruments: Costs, Benefits and Policy Instruments. 72 The concept of use cases was developed in the DG CLIMA study on adaptation modelling and refers to a generalized application of adaptation in a particular decision-making context. This report presents three use cases—national planning, sectoral planning, and programmatic planning— which were determined based on reviews of the literature and of methodology and on consultations.  25 measures, and how to finance adaptation at the local A summary of main challenges, limitations, and level within countries. The report refers to literature opportunities is detailed in Table 1. and to forthcoming further studies.73 Table 1. Summary of main challenges, limitations, and opportunities KEY CHALLENGES AND LIMITATIONS WAYS TO MOVE FORWARD • Lack of information on projected impacts of climate • Continue investing in data collection at the national risks for the short to medium term (2030s–50s), level. particularly to inform sectoral or investment portfolio • Provide incentives for adaptation studies at the assessments and including consideration of extremes national level. (wildfires, heatwaves, and so on) • Support capacity building on costing CCA across • Lack of comprehensive evidence on CCA costs Europe. • Difficulties in comparing costs of climate adaptation • Encourage the exchange of knowledge and lessons measures across countries due to use of different learned as well as the sharing of data and reports— methodologies even preliminary insights—on costing of CCA measures • Lack of knowledge on the benefits of CCA measures to enhance the evidence base. needed to enable prioritization and timing as well as • Evaluate expenditures and budget plans to identify assessment of tradeoffs among various measures adaptation gaps and track progress. • Complicated contextualized costing of CCA measures • Conduct further analytics on private versus public due to lack of analysis at the sectoral level or for sector investment in CCA measures. investment portfolios, calling for creative solutions that have to be arrived at through a resource-intensive process based on a mixture of literature reviews, data, and information collected on national strategies • Lack of research on CCA measures supporting multi- hazard resilience 73 WB and EC. 2024 forthcoming. Financially Prepared: The Case for Pre-positioned Finance. See also ACCREU (assessing climate risks in Europe), which is focusing on the economics of adaptation. Ecologic. 2023. Assessing Climate Change Risk in Europe (ACCREU). Link.  26 Introduction Europe urgently needs to scale up investments in take tipping points into account.79 Structural changes climate change adaptation (CCA), given significant will be needed to deal with the systemic impacts to all losses and damage caused by natural and climate- economic sectors; in fact, evidence suggests the related hazards. The continent is warming faster continent is unprepared for the larger disasters than any other global region on Earth,74 which makes already being experienced, as illustrated by the it increasingly subject to crisis weather events, acting losses from floods in 2021 (amounting to more than directly and/or as a stress multiplier.75 Between 1980 €40 billion in Germany),80 drought in 2022, and and 2022 alone, total economic losses from weather increasingly disruptive seasonal heat waves and and climate-related events already amounted to wildfire seasons. Even under a best-case 1.5° degree €650 billion across 27 European Union (EU) Member warming scenario, certain global, climate, and States.76 Although Europe has dealt historically with socioeconomic tipping points81 may already have extreme weather, most such events are projected to been reached. With warming between 2°and 4°C, ten become more frequent and intense,77 stretching of sixteen tipping points (five global and five regional)82 preparedness and response capacity and resulting in could be reached; these include a significant ice loss more significant economic loss and harmful effects in the Barents Sea and an ice-free Arctic, which on welfare. would have a direct impact on Europe.83 Economic losses from climate change are projected In this context, it is important for European countries to continue growing. Under a high emission scenario, to take action and invest in CCA. Such investments EU gross domestic product (GDP) could be 7 percent can reduce direct losses from disaster and climate lower than in the baseline by a conservative impacts while providing numerous economic, social, estimate.78 Across all scenarios, by 2070, one-quarter and environmental benefits, such as enhanced of EU regions could experience GDP losses greater growth, more trade and job opportunities, gains in than 5 percent, noting that these estimates do not productivity, improvements in emission reductions 74 WMO/Copernicus. 2022. Link.; Pörtner, H.-O., et al. 2022. Link. 75 Collins Dictionary. 2022. The Collins Word of the Year 2022 - A Year of Permacrisis. Link. 76 EEA 2023a. 77 Kovats, R. S., et al. 2014. Link. 78 EC. 2024. Europe’s 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society. Link. 79 Bosello et al. 2020. Link. 80 Prognos. 2022. Extreme weather damages in Germany since 2018. Link. 81 IPCC. WGII AR6 full report. Link; GSI. 2023. Global tipping points report. Link. 82 “Regional” is meant to cover the European region as aligned with climate models; “cross-country” is used, where suitable, to clarify. 83 McKay et al. 2022. Exceeding 1.5°C global warming could trigger multiple climate tipping points. Link. 27 and air quality, and increases in ecological value and to the Commission through the EEA platform on biodiversity.84 Studies show that adaptation can, for national actions88 have shown progress related to example, be extremely effective in reducing the CCA, including compliance with the EU Climate Law economic costs of climate change–related coastal (summarized in Box 15 in Annex 1).89 The reporting and river floods.85 A recent report from the World indicates progress in the policy landscape, as Bank and the European Commission (EC) reviewing countries develop and update climate adaptation more than 70 investments across Europe has also policies and legislation to improve monitoring, shown that investments with a portfolio of measures reporting, and evaluation (MRE), as well as climate addressing disaster risks can deliver a triple dividend, risk analytics (CRAs). The reporting identified several with numerous co-benefits.86 knowledge gaps related to the costing of CCA. By providing comprehensive insights and use cases,90 Tracking the implementation progress of CCA plans this report plays a crucial role in supporting EU may be complicated, however. Common quantified Member States in their strengthening of national global or EU objectives for CCA are lacking, as are adaptation actions by addressing the following cross-cutting targets for climate risk reduction and challenges: “acceptable residual impacts” after CCA (which are societal decisions) and estimates of CCA needs for • EU Member States face substantial resource EU Member States. National plans include some constraints on CCA, including limitations on their costing of CCA measures, but the coverage is ability to conduct resource- and time-intensive inconsistent, and comparability is difficult. CRAs. While some EU Member States have made Furthermore, an absence of clear tagging of CCA in progress in multi- and cross-sectoral risk expenditures (planned and actual) in budgets87 assessments and thematic and sector-specific makes it difficult to track the implementation of studies and in filling strategic knowledge gaps in measures and assess investment gaps. systemic adaptation, the overall rate and extent of progress remain limited. This report and the use This report directly addresses key knowledge gaps cases it presents show ways in which thematic CRAs identified in the 2023 climate reporting by EU focused on critical sectors and issues can help Member States and the EC, providing valuable support decision-making by filling gaps not insights for the enhancement of EU and national addressed by comprehensive cross-sectoral, cross- adaptation actions. In the 2023 reporting required hazard CRAs. by the regulation 2018/1999 from EU Member States 84 An EU assessment of the macroeconomic impact of the European Green Deal suggests a projected GDP in 2030 of 0.5 percent above the baseline in the best-case scenario as a result of increased private consumption, due to the use of carbon revenues to reduce value-added tax (VAT) and support energy efficiency investments (EC 2022. Economic impacts of the green transition. Link.). In the EU, employment in renewable energy more than doubled between 2004 and 2018, from 660,000 to 1.51 million jobs. (European Parliament 2022. Economic impacts of the green transition Link.). Meanwhile, investment in adaptation in the EU is expected to create (directly and indirectly) a total of 500,000 additional jobs by 2050 (EC 2014. Assessing the Implications of Climate Change Adaptation on Employment in the EU - Final Report & Annexes. Link.). UN findings reveal that adaptive agricultural measures such as solar-powered irrigation, weather alert systems, and new crop varieties could preclude losses in global agricultural yields by up to 30 percent by 2050 (UN 2023. Climate Action Fast Facts. Link.). Maksimovic, C. 2017. Blue Green Solution: A Systems Approach to Sustainable, Resilient, and Cost-Efficient Urban Development. Link. 85 Lincke et al. 2018. D2.3. Impacts on infrastructure, built environment, and transport Deliverable of the H2020 COACCH project. Link.; Lincke and Hinkel. 2018. Economically robust protection against 21st century sea-level rise. Global Environmental Change 51, 67-73. Link. 86 The triple dividend of resilience investments includes saved lives and avoided losses (dividend 1), induced economic and development benefits (dividend 2), and environmental and social benefits (dividend 3). Benefit-cost ratios typically ranged between 2 to 10. World Bank. 2021. Economics for Disaster Prevention and Preparedness - Investment in Disaster Risk Management in Europe Makes Economic Sense. Link.; Tanner et al. 2015. The Triple Dividend of Resilience. GFDRR/World Bank/ODI Link. 87 Using Rio Markers, for instance (Kovats et al. 2014). The EC sometimes uses Rio Markers to measure and track its environmental and climate- relevant spending and provide statistical reports to the OECD-Development Assistance Committee (DAC) See European Union (EU). 2010. Short Guide to the Use of Rio Markers. Link. 88 EC. 2018. Regulation 2018/1999. Link.; EEA. 2023. Is Europe on track with climate resilience? Link.; See also Leitner, M. et al. 2023. Technical paper. Link. 89 See EU. 2021. Regulation (EU) 2021/1119. Link. 90 Defined at the beginning of Chapter 2.  28 • A lack of standardization of methodologies for • EU Member States face challenges with regard to costing CCA makes it difficult for Member States to horizontal policy integration and multi-level implement and comply effectively with EU law. This coordination in scaling adaptation actions and report aims to empower them by offering valuable conducting evaluation processes. They recognize guidance, inspiration, and a comprehensive the significant role of coordinating actors, however, overview of methodologies, along with practical such as ministries, governmental agencies, or use cases, to support their efforts to achieve institutes, and the need to emphasize cross- compliance. country networking in preparation for climate change impacts. This report contributes in this • A lack of assessments and common methodologies area by providing valuable arguments and best for CCA costing, as well as of systematic processes practices in support of the efforts of these to assess costs and track financing of National coordinating actors. Adaptation Strategies (NASs) and National Adaptation Plans (NAPs), hinders MRE processes • Better evidence is needed to achieve synergies and limits reporting obligations. Some EU Member between CCM and CCA in key sectors. To align with States with comprehensive or more advanced the objectives of the Energy Union and Paris CRAs and climate legislation do not consistently Agreement, more information is needed about provide costing of CCA measures in their NAPs or sectors such as forestry, agriculture, energy, and NASs or track CCA expenditures. Dedicated infrastructure. Improved evidence is required to budgets or financing streams for CCA avoid insufficient adaptation action or implementation are rarely included, although some maladaptation and to include consideration of the of the strategic and legislative frameworks are role of prevention in adaptation.  This report currently being revised. By drawing on the showcases use cases that demonstrate the experiences of other EU Member States and achievement of such synergies and broader existing literature, this report significantly objectives, while also highlighting the benefits of contributes to the knowledge base by providing integrating multi-hazard disaster risk valuable insights into the calculation of CCA costs considerations and transparently discussing and presenting systematic methodologies for potential trade-offs. assessing and tracking financing. • Research and support remain insufficient for • Gaps persist at national and sectoral levels in the defining variable adaptation pathways. Member coverage and quality of the climate risk analytics States need to be able to share examples of and costing of CCA measures that inform the adaptation excellence and determine the bankability tracking and evaluation of CCA expenditures and of adaptation options and the effectiveness and feedback into policy development. While most EU efficiency of CCA measures and progress. This Member States report utilizing EU funds for CCA, report provides a valuable foundation for further only six (Germany, Greece, Italy, Latvia, Portugal, research in these areas, offering a comprehensive and Spain) have established dedicated national overview of the literature and presenting various use adaptation funds for financing national or sectoral cases at different levels. adaptation actions. This report improves the knowledge base that inform adaptation investment The report’s structure and content are summarized planning and financing. in Figure 4.  29 Figure 4. Structure and content of the report Chapter 1: OVERVIEW OF THE LITERATURE AND METHODOLOGIES FOR COSTING CCA Understanding the overall process (building blocks), key elements, and analytical approaches Chapter 2: EXPANDING THE EVIDENCE BASE ON COSTING CCA WITH “USE CASES“ Showcasing existing examples and select use cases to demonstrate and encourage uptake BULGARIA USE CASE ROMANIA USE CASE SWEDEN USE CASE Informing the NAP and strategic Informing the NAP and Spatial vulnerability & benefit cost plans macroeconomic analytics analysis • Heat & Wildfire risk • Multihazard • Wildfire risk • National-level Planning • National-level Planning • Sector-level Planning CROATIA USE CASE ROMANIA USE CASE AURELIA USE CASE (FICTIONAL) Climate proof select critical assets Flood proofing and upgrading Climate proof select critical assets • Heat transport networks • Heat/Wildfires • Flood risk • Transport sector • Programmatic Planning • Sector/Programmatic Planning • Programmatic Planning EXECUTIVE SUMMARY & CONCLUSION Key results, takeaways, and recommendations This report holds valuable insights for different find sections of particular interest, tailored to their entities and groups of stakeholders, catering to their individual needs. To assist readers in navigating the specific roles and responsibilities. Each reader can report effectively, a reader’s guide is provided in Box 1. BOX 1. READERS’ GUIDE This box serves as a helpful reader’s guide, providing an readers understand trade-offs and consider multi-hazard overview of the report’s content and directing various and sustainability factors when prioritizing interventions, stakeholders to the sections that align with their specific and they offer knowledge and technical capacity relevant to interests. It acts as a roadmap, ensuring that readers can using CCA information to prioritize investments in CCA and easily navigate to the sections most relevant to them. CCM, including data on measures, methodologies, and best practices for different hazards and levels of analytics. The Line ministries (for example, Ministry of Interior, Ministry analysis shows how EU Member States can undertake CCA of Environment): These readers may find the case studies costing at different levels of analysis to serve different policy in Chapter 2 of particular value, as they showcase existing objectives. At the sector level, the mainstreaming of CCA examples and provide insights into the different costing (by ministries of finance and line ministries and at methodologies and steps used in various use cases. the local level) in medium-term planning and budgeting is Chapter 3 consolidates the information and presents key useful for improving policy and financial planning for CCA. insights and policy recommendations applicable to line Looking forward, the analysis shows that EU Member States ministries. The analysis provides guidance on the actions will need to shift from studies to inform incremental necessary to create effective adaptation pathways and adaptation to ones that will enable transformational supports the alignment with EU-wide objectives, strategies, adaptation. and directives. The case studies will also help ministry  30 Coordinating entity on CCA (for example, Ministry of holders at the EU level. The information in Chapter 1 will Finance): These readers may find Chapter 1 of special enhance understanding of the impacts of climate change interest, as it provides an overview of key literature and on critical sectors, informing the EU-wide Climate Change methodologies for costing CCA. Chapter 3 consolidates the Risk Assessment and the EU’s progress with respect to the information and presents key insights and policy Paris Agreement. Furthermore, the chapter will help recommendations applicable to coordinating entities. The readers understand the costs of various CCA options and analysis demonstrates the economic benefits and broader how to use this information for planning and implementing advantages of taking action on both CCA and CCM. Building CCA programs at the national and EU levels. Continual resilient futures in the face of evolving climate risks requires dialogue is required to mainstream and coordinate developing comprehensive investment packages for CCA adaptation across sectors, including in planning, financial, and DRM that evolve over time. CCA is more challenging to and fiscal strategies, and to promote more ambitious and finance than CCM, and the public sector plays an important comprehensive sectoral strategies to enhance resilience. role in addressing barriers and creating an enabling Effective adaptation will require more support for developing environment. The analysis shows how EU Member States sectoral adaptation studies and financing strategies. can undertake CCA costing at different levels of analysis to Macro-level assessments of CCA costs can support serve different policy-making objectives. The main­ advocacy for CCA by demonstrating that the benefits streaming of CCA costing in medium-term planning and exceed the costs at the country level, not just at the program budgeting at the sector level (by ministries of finance and and investment levels. The assessments can be line ministries and at the local level) is useful for improving complemented by CCA expenditure tracking, or climate policy and financial planning for CCA. This information can budget tagging, as well as consideration of extreme support overall planning, contribute to further analysis, and scenarios for civil protection and results from help Member States meet requirements for reporting to macroeconomic and macro-fiscal analysis to develop the EU and international treaty bodies, such as under the effective CCA contingency plans and financial resilience Paris Agreement. The analysis may help entities improve instruments. their National Climate Risk Assessments and National Adaptation Plans and programs and “connect the dots” CCA experts (and/or practitioners broadly interested in between DRM and CCA programs simultaneously. CCA costing): This group of readers will find the entire report valuable. Chapter 1 provides an overview of key EU-level stakeholders: These readers may find Chapter 1 literature and methodologies and explains the fundamentals practical, as it provides an overview of key literature and of costing CCA, while Chapter 2 provides practical examples methodologies for costing CCA, along with the use cases. and insights into costing methodologies through detailed Chapter 3 consolidates the information and presents key case studies. Chapter 3 provides an overview of further insights and policy recommendations applicable to stake­ research and ways forward. S T U DY O B J E CT I V E costs is needed, as is guidance on how to develop methodologies that can inform CCA investment and Scaling up investments in climate adaptation policy decisions. Such information could help improve requires more and better information on their costs. the robustness and coverage of EU-wide assessments A knowledge gap regarding the costs of CCA at of CCA investment needs and support decision- national and EU levels inhibits countries from taking making in the prioritization and implementation of timely actions, making decisions about CCA CCA measures. investments, and scaling up finance (public and private) to address current adaptation gap. This gap This report informs high-level cross-country is widening as adaptation needs—and associated strategic dialogue and the development of CCA costs—increase relative to the available flows of programs at the national level by addressing four finance for adaptation.91 Improved estimation of CCA key questions: 91 UNEP. 2021. Link.  31 1. How are the costs of CCA calculated across F O C U S A R E A S A N D M E T H O D O LO G Y Europe, and what purposes in terms of policy making do these estimates serve? This study includes analysis of weather- and climate- related natural hazards that are expected to 2. What are the magnitude and ranges of the CCA intensify because of climate change, including costs estimated for Europe, and how can these floods, wildfires, and extreme heat and associated estimates be used to inform strategic dialogue and impacts, such as air pollution. The analysis focuses policy making, including as part of developing on impacts at the national level, as well as results adaptation pathways following adaptive and from regional exposure analytics92 and climate iterative risk management principles? analytics (including EC studies such as COACCH and PESETA IV, national climate analytics, and sectoral 3. Is it possible to compare, scale up, and replicate studies), and literature on compound, cascading, and assessments of CCA costs from specific use cases multi-hazard risks. It combines information from that were undertaken for national policy making? these sources to show how policy makers can consider it in prioritization and decision-making. 4. When assessments and estimates of CCA costs for one country disagree, how can the findings be Analytics in this report utilize existing climate reconciled with a step-by-step approach and used change–related assessments, modeling, and to provide helpful insights for policy decision- scenarios. The study focuses on climate projections making? for the short term (to the 2030s) and medium term (to the 2050s) and considers moderate- and high- This report shares practical approaches for the emission scenarios from global and regional costing of climate change adaptation measures. assessments based on Representative Concentration The objective is to increase the knowledge base on Pathway (RCP) 2.6, RCP 4.5, and RCP 8.5.93 The CCA by summarizing major costing methodologies in analysis builds on information from the JRC PESETA94 the field and demonstrating how climate change IV, Directorate-General for Research and Innovation adaptation, and plans for it, can be costed across (DG RTD) projects, European Environment Agency different sectors. The report includes policy (EEA) studies, Intergovernmental Panel on Climate recommendations and showcases lessons learned on Change (IPCC) reports, EU regional and country assessing the costs of CCA from the perspective of assessments on CCA, the European Climate policy makers and technical staff at Member State Prediction (EUCP) Project, nationally determined and EU levels. The resulting analysis can serve as a contributions under the Paris Agreement, NAPs and basis for institutional stakeholders who are evaluating NASs, NRAs, and assessments from the literature. the costs of adaptation with respect to budgets or Generally, case study analytics are based on investment plans; seeking to cost CCA for sectoral deterministic or scenario rather than probabilistic programs; or seeking support in the evaluation of risk assessments, but they assess CCA measures strategies or actions related to adaptation objectives considering both slow-onset temperature changes under the EU Green Deal, EU Climate Adaptation and impacts from increasing climate variability and Strategy, Paris Agreement, and NAPs and NASs, selected extreme events. among others. 92 WB and EC. 2024. From Data to Decisions: Tools for Making Smart Investments in Prevention and Preparedness. 93 IPCC. 2023. Definition of Terms Used Within the DDC Pages. Link. 94 PESETA = Projection of Economic Impacts of Climate Change in Sectors of the European Union Based on Bottom-Up Analysis.  32 For examples and case studies, the report draws on Sweden, Croatia, and fictional Aurelia) to illustrate a review of academic research, as well as more than analytical processes and methods and derive lessons 30 past and ongoing programs and projects across learned. The drafting of the report included in-depth 22 countries (19 EU Member States and 3 non- consultations with stakeholders across the EC and Member States), covering a wide range of sectors EU Member States (especially with respect to the use and hazards (Figure 5). In-depth analytics were case studies), to ensure the alignment of approaches undertaken for five case studies (Bulgaria, Romania, and relevance of findings. Figure 5. Map of country case studies analyzed and reviewed in the report F  =  Forestry L  =  Land management T  =  Transportation S  =  Some (2-5 sectors) M  =  Multi (5+ sectors) Source: World Bank. The terms and concepts related to climate change as forestry, buildings, transportation, and human health adaptation used here are aligned with EU and five of EUCRA’s storylines (prolonged heat and terminology and defined in the glossary at the drought; large-scale flooding; critical infrastructure beginning of the report. failures; ecosystem disturbances and carbon sinks; and financial instability) and cross-cutting topics. Also The report complements and is aligned with the directly or indirectly covered in this report are the top approach, data, and methodology used by the five key future hazards (heat waves, droughts, wildfires, European Climate Risk Assessment (EUCRA; see Box floods, and heavy precipitation) and the top ten key 2) and covers the main hazards and sectors identified affected sectors mentioned by EU Member States in the in the 2023 reporting of Member States on climate latest EEA reports (health, agriculture, forestry, adaptation. It includes consideration of “plausible biodiversity, energy, water management, transportation, climate scenarios” and adoption of the hazard-sector infrastructure and buildings, tourism, and civil cross-cutting approach. It covers such EUCRA sectors protection).95 95 EC. 2018. Regulation 2018/1999. Link. EEA. 2023. Is Europe on track with climate resilience? Link. See also Leitner, M. et al. 2023. Technical  paper. Link. 33 BOX 2. THE EUROPEAN CLIMATE RISK ASSESSMENT (EUCRA) The European Climate Risk Assessment (EUCRA) is a flooding; pests and diseases; critical infrastructure failures; comprehensive assessment of current and future risks ecosystem disturbances and carbon sinks; disruption of related to climate change in Europe.96 Started in 2022, the international supply chains; and financial instability.97 project has a total budget of €1.8 million and is funded by These storylines illustrate how current and future climate the Directorate-General for Climate Action (DG CLIMA). risks could trigger new crises and emergencies or exacerbate EUCRA provides a fast-tracked assessment based on a existing ones. review and synthesis of existing data, literature, and expert knowledge, with results expected to be published in Spring EUCRA also focuses specifically on complex risk factors, 2024. The assessment supports the identification of key such as cross-border, cascading, and compound risks. The risks that need to be tackled by the next EC (to be elected in cross-cutting topics it covers include social justice and 2024) and the next multi-annual financial framework. It cohesion, EU competencies and risk ownership, and provides an EU-wide point of reference for conducting and priorities for action. The climate risks are assessed in terms updating national or subnational climate risk assessments. of their severity for the near term, mid-century, and late century for low- and high-warming scenarios, as well as in In thematic fact sheets, EUCRA sets forth eight key climate terms of confidence in the findings. The near-term analysis risks for selected systems and sectors and seven climate- includes an assessment of Europe in times of change and risk storylines. EUCRA considers key climate risks for eight extremes and draws on data from the Copernicus and Inter- selected systems and sectors in thematic factsheets: Sectoral Impact Model Intercomparison Project (ISIMIP).98 biodiversity and ecosystems; marine and coastal systems; EUCRA also includes a policy readiness analysis for each water security; food security; human health; energy; built fact sheet and storyline to assess the urgency for these environment; and EU outermost regions. The seven risks to be tackled by the next Commission. storylines are prolonged heat and drought; large-scale This report, with its specific focus on costing, needs existing cost assessments generally focus more on to be considered in the context of broader CCA “hard” structural adaptation measures, as their costs debates and studies. Adaptation is a complex topic, are easier to quantify than those of “soft” behavioral and decisions on investments need to be based on and policy measures.101 This emphasis may lead to societal debates, cross-sectoral studies, cross- biased, overestimated CCA costs, while crucial “soft” hazard risk analytics, economic studies, and measures, which could potentially yield high returns adaptation studies. A few key analytical and policy with relatively low implementation costs, are neglected. gaps are associated with estimating the costs of adaptation. In light of a spectrum of projected climate In view of these factors, this report aims to provide impacts, the costs of adaptation may be as broad an overview as possible. It covers a wide underestimated, while its social, cultural, and range of sectors and types of adaptation measures environmental co-benefits are often not quantified and takes into account the socioeconomic and because data on them are lacking.99 As a result, environmental aspects of adaptation. It focuses on adaptation may be presented as neither efficient nor hazards, sectors, and use cases that are generally effective, which could make decision-makers less covered in the literature, concentrating on, for reluctant to invest in adaptation measures. In example, wildfires and heat adaptation, as opposed addition, although studies on adaptation costs at the to flood risk or sectors such as transportation and sectoral level are available, the coverage is uneven, building upgrades. It also focuses mainly on countries as the studies are often limited to a few sectors, such of southeastern Europe that were selected at the as agriculture and flood prevention.100 Moreover, beginning of this project based on criteria that 96 EEA. 2023b. European Climate Risk Assessment. Link. 97 Berckmans, J. 2023. European Climate Risk Assessment - Building resilience of European societies to climate change risks 98 Inter-Sectoral Impact Model Intercomparison Project (ISIMIP). 2023. ISIMIP. 99 EEA. 2023a. Link. 100 OECD. 2008. 101 OECD. 2008.  34 included the added value of analytics, existing systems may differ considerably between countries. dialogue with the countries, and access to climate This was considered where possible by exploring, for risk analytics and local expertise. instance, urban-scale measures; but the costs of, say, governance at the national, cross-country, or Finally, this report only briefly considers the issue of local level need to be assessed further. Some who should bear the investment costs for CCA. It examples are provided from the literature and from focuses mostly on investments that are generally case studies (such as studies of Germany) that have undertaken by the public sector. Discussion of the outlined this in detail. public/private split of investments would require, beyond methodological aspects, the consideration of national legislation, as well as much more detailed R E L E VA N C E A N D L I N KAG E S W I T H OT H E R adaptation studies.102 For those who wish to learn R E L E VA N T R E S E A RC H A N D I N I T I AT I V E S more, the report references literature that has provided insights into this question, along with more This study contributes information relevant to details on financial instruments for CCA, including several EU legislative frameworks, and it potential risk transfer solutions.103 Also important to complements major EC studies related to CCA, as consider is the share of costs to be carried at the summarized in Figure 6. local, cross-country, or national level, as political Figure 6. Linkages to EU law and efforts European Union / regional level adaptation Member States / national level adaptation Objectives in national, subnational and Objectives in EU policies, strategies and programs* sectoral policies and strategies Identification and costing of Mainstream climate appropriate climate adaptation adaptation into major measures (informed by detailed Increase resilience EU funding programs to adaptation studies, sectoral through adaptation contribute to 30% of EU assessments, consultations etc.) investments and budget climate target finance in EU 27 [no EU baseline] Identification of adaptation Support Member States investment and financing gaps to step up climate [compared to national baselines adaptation action and tracked adaptation informed by: expenditures] comprehensive adaptation strategies/ Increase adaptation investments and Assumed: plans share of finance for adaptation effective investments mainstreaming climate (despite considerations into Assumed: effective uncertainty) fiscal and budgetary investments (despite planning uncertainty) Target: Reduce expected losses Target: Reduce expected losses due to climate change impacts** due to climate change impacts** [EU baseline: 2017 impacts 12,052 billion EUR] [national baselines] * European Climate Law, EU Green Deal, EU Adaptation Strategy, EU Disaster Resilience Goals, DG CLIMA 2020-2024 Climate Action Plan. ** Determined based on: IPCC, European Commission studies, EUCRA (European Climate Risk Assessment); external studies (academic, private sector, insurance sector etc.); downscaled climate models; national risk assessments; impact and vulnerability assessments; stakeholder and expert consultations. Source: World Bank based on information from European Commission website. 102 The issue of investments in adaptation and cooperation among the insurance industry, EC, and other actors is currently also discussed by the EC- driven Climate Resilience Dialogue, from which a final report is due in June 2024. 103 WB and EC. 2024 forthcoming. Financially Prepared: The Case for Pre-positioned Finance.  35 First, the report is aligned with the following Second, the report complements EUCRA research objectives of the EU Adaptation Strategy:104 in the following ways: • Smarter adaptation, through the use of robust data • The study is relevant to five of EUCRA’s seven and risk assessment tools available to all.105 This storylines108 and cross-cutting topics.109 It assesses study showcases the use of public datasets and current and future climate risks and impacts in outlines methodologies for assessing climate risks, selected European countries (Bulgaria, Romania, such as wildfires and extreme heat. Croatia, and Sweden) and proposes corresponding measures to enhance adaptation investment and • Faster adaptation, through support for CCA private financial preparedness for climate change. Its use of and public investments and solutions. This study climate risk analytics to assess the impacts of provides information necessary to the costing of extreme heat, wildfires, and floods at macro and CCA measures in support of investment decisions sectoral levels corresponds with EUCRA’s in NAPs and NASs. To complement existing “prolonged heat and drought” and “large-scale research and studies focusing on medium- to long- flooding” storylines. For Bulgaria and Romania, term timelines (to 2050s and 2100s), it looks historical and current heat events are assessed mainly at the short-term timelines (to 2030s and based on national data and existing analytics, while 2040s) of most relevance for policy decision- future extreme heat days between 2020 and 2050 making. The study is aligned with the European under the RCP 4.5 scenario are simulated based on Investment Bank Climate Adaptation Plan.106 climate models from the Copernicus Climate Change Service. Detailed analytics on current • Systemic adaptation, through the mainstreaming wildfire losses and projected wildfire impacts are of CCA into EU policies, national macro-fiscal undertaken for Sweden based on EFFIS and national policies, and local adaptation plans and the data, and current and future flood risks in Romania promotion of nature-based solutions (NBSs). This are assessed using investment and financial flow study focuses on the costing of CCA both at the (IFF) analysis based on vulnerability and risk national level, using the macro-fiscal models (f.e. mapping, with the future risk analytics focusing on MFMod), and at the programmatic (or investment the transportation network. portfolio) level. It assesses “climate-proofing” options for critical infrastructure and, as feasible, • The study is relevant to EUCRA’s storylines in terms how proposed measures need to align with EC of the climate risks considered. For the “ecosystem standards, such as building codes and the EU disturbances and carbon sinks” storyline, for renovation strategy. The study also showcases and instance, the Sweden case study stresses the role emphasizes methodologies to promote NBSs, as of forests and peatlands as carbon sinks and well as local studies that can help support the reveals the importance of investing in adaptive “Mission Adaptation to Climate Change” agenda.107 forest management and peatland restoration for the purposes of ecological and carbon emission reduction. Benefit-cost analysis undertaken in Croatia corresponds to EUCRA’s “critical infra­ structure failures” storyline by showcasing the importance of retrofitting selected infrastructure, 104 Climate-ADAPT. 2023b. EU Adaptation Strategy. Link. 105 This should be achieved by enhancing the European platform Climate-ADAPT as the European platform for CCA knowledge. 106 European Investment Bank (EIB). 2021. The EIB Climate Adaptation Plan - Supporting the EU Adaptation Strategy to Build Resilience to Climate Change. Link. 107 EC. 2023. EU Mission: Adaptation to Climate Change. Link. 108 These include prolonged heat and drought, large-scale flooding, critical infrastructure failures, ecosystem disturbances and carbon sinks, and financial instability. 109 These include stress-testing infrastructure, prioritization of CCA investments, and planning for extreme events.  36 with consideration of seismic and climate resilience Action Plan on Disaster Risk Reduction (DRR),110 and energy efficiency. The flood risk assessment of and Recovery Plans. The study contributes by the transportation network in Romania also focusing on sectors, assets, and case studies relevant corresponds to this storyline, as it identifies the to the civil protection sector and showcasing direct damage that could result from floods on the methodologies for the costing of CCA measures, road network, as well as resulting transportation considering extreme climate events and scenarios.111 disruptions and sectoral economic losses, and it It also reaches beyond EU Member States by estimates the costs and benefits of adaptation providing examples relevant to all Union Civil options that enhance the climate resilience of the Protection Mechanism (UCPM) countries. transportation infrastructure, including both traditional engineering measures and nature- Fifth, the report supports the implementation of the based solutions. European Climate Law,112 the EU Green Deal, and the regulations for land use, land use change, and • This study showcases how to conduct detailed forestry (LULUCF)113 for 2021–30. The study assessments at national and sectoral levels. By focuses on wildfires and the forestry sector and identifying adaptation needs and proposing priority considers in a cross-cutting manner the co-benefits CCA strategies based on the results of climate risk of CCA programs for climate change mitigation (CCM) analytics, the study could notably assist EUCRA in and the Sustainable Development Goals (SDGs). its Task 7, “Risk evaluation and priorities for action,” which aims to identify key adaptation needs and Sixth, the report is highly relevant for non-EU priorities and adaptation-related investment and countries under the UCPM and beyond. The study research needs. can contribute to broader debate on linking DRM and CCA efforts, including how to conduct analytics that Third, the report supports the global stocktaking consider focus, objectives, analytical tools, and exercise under the Paris Agreement, reporting methodologies from both the DRM and CCA sectors.114 obligations under EU laws, and implementation of the EU sustainable finance agenda. The study offers methodologies for tracking expenditures for the A D D E D VA L U E costing of CCA at the national level and offers practical examples. This study has been designed to add the maximum amount of value to past and ongoing EC projects, Fourth, the report provides information relevant to with consideration of major analytical and information the EU’s legislative framework on disaster risk gaps identified in the recent DG CLIMA adaptation management (DRM), including the Disaster modeling studies.115 It assesses and addresses the Resilience Goals (DRGs) and Risk Scenarios, the EU gaps in several ways: 110 Climate-ADAPT. 2016a. Action Plan on the Sendai Framework for Disaster Risk Reduction 2015–2030: A Disaster Risk-Informed Approach for all EU Policies. Link.; EU. 2019. Decision (EU) 2019/420. Link.; EU. 2021. Regulation (EU) 2021/836. Link. 111 WB and EC. 2024 forthcoming. From data to decisions: tools for making smart investments in prevention and preparedness in Europe. 112 EC. 2023. European Climate Law. Link. 113 EC. 2023. Land Use and Forestry Regulation for 2021–2030. Link. 114 This study can contribute to ongoing and future analytics conducted by the World Bank for its Country Climate and Development Reports (see World Bank 2024. Country Climate and Development Reports (CCDRs). Link.). 115 The study can fill information gaps for the following use cases mentioned in the DG CLIMA study from 2021: A1 (Rapid analysis for CLIMA to support rapid policy response - rapid scripts to look at exposure, vulnerability to different hazards); B4 (Climate change risk assessment for EU investments - extensive analysis of CC risk and adaptation actions e.g. major infrastructure); B5 (Climate change risk assessment for EU investments, rapid analysis - rapid scoping analysis for less sensitive, less capital-intensive projects [rapid]); D12 (Analysis of climate risks for business and finance - portfolio risk analysis, mix of green and traditional investments, identify vulnerable locations [global] [rapid]); and E16 (Analysis supporting national adaptation plans in accordance with EU requirements: risk assessment and options analysis) (Ebrey, R. et al. 2021. Study on Adaptation Modelling: Comprehensive Desk Review: Climate Adaptation Models and Tools. Link.; Jeuken, A. et al. 2021. Study on Adaptation Modelling: Report on Use Cases and Rapid Analysis. Link.).  37 • By presenting a menu of methodological As a result, the study contributes to policy dialogue approaches for different contexts and decision and implementation in the following ways: making questions on adaptation (level of data/ information, number of pre-existing studies, • By informing national policy-making for costing timeline for decision-making, ambition for action CCA by using the methodologies it presents and from preparing for the worst to climate proofing through practical application of its three “use economies and infrastructure against average cases” changes, and so on) • By informing the preparation and implementation • By outlining methods that focus on near-term of CCA at various levels of decision-making and adaptation planning and support the development with relevance to different national and of adaptation pathways following iterative risk programmatic institutional actors, such as management116 approaches and based on gradual ministries of finance, line ministries, and civil improvement of information on additional required protection agencies investments • By improving the knowledge base by consolidating • By providing results for and covering EU Member information on climate risks from various sources, States generally underrepresented in the literature including NRAs and NAPs, projections based on on CCA costing (that is, countries in southeastern regional climate models (RCMs) analysis of histo­ Europe) rical trends, and extreme scenarios • By presenting innovative, semi-quantitative • By providing recommendations based on in-depth analytics based on modeling, economic analysis, case study analytics (for Croatia, Romania, expert-based judgement, stakeholder consul­ Bulgaria, Sweden, and fictional Aurelia) and case tations, and existing findings from the literature studies from the literature (22 European countries,117 including Austria, France, Germany, and Spain. 116 Watkiss, P., et al. 2014a. Link. 117 Including EU Member States Austria, Bulgaria, Croatia, Czechia, Denmark, Estonia, France, Germany, Greece, Hungary, Italy, Latvia, the Netherlands, Poland, Portugal, Romania, Slovakia, Spain, and Sweden; the UCPM participating state of Türkiye; and the non-EU, non-UCPM states of Switzerland and the United Kingdom.  38 1. Overview of the Literature and Methodologies for Costing CCA This chapter provides an overview of the literature of different methodologies in three “use cases,” and methodologies for costing CCA and summarizes focusing on national planning, sectoral planning, and recommendations and lessons learned. The key investment portfolio planning, highlights a menu of insights are based on a review of over 30 analytical approaches available, and describes in detail some projects from the past two decades at the regional common principles for developing adaptation and national levels. The chapter details the application pathways following iterative risk management. K E Y TA K E AWAY S A N D R E C O M M E N D AT I O N S • Scaling up investments in CCA requires more and better information on their costs across Europe. A knowledge gap regarding the costs of CCA at national and EU levels inhibits countries from taking timely actions, making decisions about CCA investments, and scaling up finance (public and private) to address the current adaptation gap. No recent consolidated estimates of the costs of CCA exist at the EU level, and most previous estimates for the EU may be low; this suggests the importance of countries’ undertaking detailed assessments at the national level and in a contextualized manner rather than relying solely on high-level, approximate regional assessments. This analysis produces some plausible, and indicative short-term estimates for the EU-27 by extrapolating from existing national studies, providing values that range from €15 billion to €64 billion per year. • Countries can undertake CCA costing at different levels of analysis to serve different policy-making objectives. At the most aggregated level, macro-level assessments of costs can be useful to advocate for CCA—that is, to show benefits exceed costs at the country level, and not only based on programs and investments. Such assessments can be complemented by CCA expenditure tracking, or climate budget tagging. To support the development of effective CCA contingency plans and financial resilience instruments, assessments can also take into consideration extreme scenarios for civil protection and Union Civil Protection Mechanisms (UCPMs) and results from macroeconomic and macro-fiscal analyses. At the sector level, mainstreaming of CCA costing in medium-term planning and budgeting by ministries of finance, line ministries, and locally is useful for improving policy and financial planning for CCA. At the level of directorate-generals or line ministries in particular, more in-depth analysis of climate risks and CCA options and costs can be integrated into strategies and plans to support prioritization. At the most detailed level, decision-support tools and costing methods can be used to look at individual programs, projects, or investments. 39 • Lessons from various EU countries provide invaluable insights on approaches to cost adaptation depending on adaptation policy needs. Cross-country comparison of CCA costs is challenging as, unlike for mitigation, there are no global or EU objectives for CCA. This means any analysis has to decide what these objectives should be and the balance of the benefits and costs of adaptation, as well as the “acceptable residual impacts” after CCA for a spectrum of projected climate impacts. Adaptation costs for objectives differ based on economic efficiency, acceptable levels of risk, or risk minimization. Existing estimates from individual countries vary between €3.96 million and €11.6 billion per year— in per capita terms, from €34 in France to €110 in Slovakia (excluding the extreme values)—with large disparities in their coverage of risks and sectors. Because the differences stem from three sets of assumptions—time periods and scenarios; future risk levels: and objectives, assumptions, and methods—these figures are not directly comparable. Nevertheless, sectoral- or program-based CCA costing exercises can allow some comparability if similar methodologies are used, while CCA options can also sometimes be compared using results from societal benefit-cost analysis. • Adaptation pathways can be effectively developed by combining information on current and future climate risks with multidisciplinary expertise. The framework for adaptation pathways varies based on the policy question at hand. The approach for costing a national adaptation program, for instance, differs from that for climate-proofing infrastructure. Some underlying principles remain constant, however. Developing adaptation pathways begins with the evaluation of existing climate risks, adaptation investments, and the effectiveness of current measures. It then considers a broad spectrum of potential climate consequences and the variety of adaptation options available. This process is meant to enable the management of climate impacts adaptively and iteratively, thereby supporting “decision-making under uncertainty” (DMUU) approaches. Adaptation pathways mostly set a broad strategic direction, while the more detailed adaptation programs and measures following that direction need to be developed using the various tools, methods, and information outlined in this report. Identifying and assessing the actions to be taken for adaptation is crucial, taking into account their timing, the breadth of the climate impacts projected, and the urgency of implementation. While cost-benefit analyses of CCA measures are valuable, they should be supplemented with considerations of the urgency of decisions and path dependency—that is, the effect of decisions or events on subsequent decisions and events.  • Adaptation costing studies spur important multi-stakeholder dialogues and inform policy discussion, planning, and budgeting for mainstreaming and scaling up CCA. Across the EU, such costing processes have helped raise awareness, initiate national discussions, support decisions, and improve systems to monitor and track progress on CCA. They have contributed to mainstreaming CCA into line ministries’ plans, while the more complex assessments have sought to determine the effectiveness of measures to be selected, prioritized, and implemented. National planning studies like those in France, which estimated early adaptation costs at around €2 billion annually in this decade, have influenced short-term financial strategies as well as medium- and long-term planning. Austria’s estimate of €421 million–€573 million and Germany’s of €140 billion–€142 billion annually, were the conclusion of years of collaborative research. The studies highlighted the pressing need for improved expenditure tracking and a better understanding of broader macroeconomic implications to further improve such estimations. • Building resilient futures in the face of evolving climate risks, including compound, multi-hazard, and disruptive events, requires developing comprehensive investment packages for CCA and DRM with a mixture of options that evolve along with them. NAPs provide a foundation for more detailed sectoral studies, incorporating pathway thinking and moving to investment planning. Acknowledging adaptation as an ongoing process means moving beyond lists of technical options and employing a portfolio Overview of the Literature and Methodologies for Costing cca 40 approach, blending nontechnical and technical solutions, and creating the enabling conditions for adaptation at the sectoral or national level. To set the response to short- and long-term challenges, this process must also be iterative and dynamic. Countries have to adapt to both climate stressors and shocks and “connect the dots” between disaster risk management and climate adaptation programs. In practice, this means breaking down the silos and encouraging cross-sectoral collaboration to create synergies and streamline efforts. Reconciling views and openly discussing trade-offs is complicated but necessary to ensure investment programs can support multiple goals, including climate change mitigation and resilience. While work on these pathways has been most advanced for sea-level rise and coastal policy, the same concepts apply to other environmental issues. Enhancing the resilience of forest ecosystems, for example, necessitates a portfolio approach that considers economic viability by weighing early benefits, minimizing regrets, and starting to plan for long-term shifts. • Looking ahead, countries will need to start shifting from studies to inform incremental adaptation to ones that will enable transformational adaptation. Incremental adaptation, on which studies— including adaptation costing studies—have focused to date, aims to maintain current activities and systems. Transformative adaptation (which involves scaling up activities or systems) and transformational adaptation (which involves moving to different ones) will require going beyond existing approaches toward more strategic analysis and systems thinking, as highlighted in the EU Adaptation Mission. It would entail taking into account the long lead times for planning and the likely need for societal and governance change.118 Evolving coastal climate risks, for example, which may necessitate major changes in land use, settlements, and activities, may also require the alteration of institutional and governance structures to deliver societal change.119 Interest is increasing in systems approaches to address such complex and multi-objective policy issues as transformational adaptation. A range of methods is being piloted, including social network analysis, systems dynamic modeling, and others.120 While these can be useful for mapping risks, their application to adaptation is both complicated and time- and resource-intensive. • EU support and cooperation can enable the uptake of CCA costing assessments. With increasing climate risks, adaptation will need to be scaled up at all levels, from European down to local, and will call for an expansion of investments and an increase in CCA costs. The benefits of improving the practice and uptake of costing studies to enhance the efficiency and effectiveness of adaptation decision-making will be EU-wide. Although a menu of tools are already available, databases of the costs of CCA measures, case study examples of costs and benefits, and efforts to provide support for costing methods and how to effectively use climate risk information available also at the regional level (such as in COACCH, PESETA, and EUCRA studies) could result in quicker and more robust assessments and, in turn, improve the value-for-money of adaptation delivery. Support may also include, for instance, ways to integrate effectively NBSs and a mixture of grey and green solutions in investment packages across Europe, as aligned with the EU’s flagship climate and nature policies and the Green Deal. These could also provide a practical starting point while more country-specific, tailored, and granular assessments are becoming available. National coordinating entities on CCA and sectoral experts can also be further connected to European and cross-country expert networks to ensure they have access to the latest evidence. 118 IPCC. 2018. Annex I: Glossary. Link. 119 ClimateReadyClyde. 2020. Resilient regions: Clyde Rebuilt. What does transformational adaptation look like? Link. 120 Martinez-Hernandez. 2022. System dynamics modelling and climate change adaptation in coastal areas: a literature review. Link.; Zarghami and Dumrak. 2021. A system dynamics model for social vulnerability to natural disasters: disaster risk assessment of an Australian city. Link. Overview of the Literature and Methodologies for Costing cca 41 Building blocks for costing CCA measures Adaptation pathways can be effectively developed “decision-making under uncertainty” (DMUU) by combining information on current and future approaches. Adaptation pathways mostly set a broad climate risks with multidisciplinary expertise. The strategic direction (see Figure 7), while the more framework for adaptation pathways varies based on detailed adaptation programs and measures following the policy question at hand. The approach for costing that direction need to be developed using the various a national adaptation program, for instance, differs tools, methods, and information outlined in this from that for climate-proofing infrastructure. Some report. Identifying and assessing the actions to be underlying principles remain constant, however. taken for adaptation is crucial, taking into account Developing adaptation pathways begins with the their timing, the breadth of the climate impacts evaluation of existing climate risks, adaptation projected, and the urgency of implementation. While investments, and the effectiveness of current cost-benefit analyses of CCA measures are valuable, measures. It then considers a broad spectrum of they should be supplemented with considerations of potential climate consequences and the variety of the urgency of decisions and path dependency—that adaptation options available. This process is meant is, the effect of decisions or events on subsequent to enable the management of climate impacts decisions and events.  adaptively and iteratively, thereby supporting Overview of the Literature and Methodologies for Costing cca 42 Figure 7. Developing and adjusting adaptation pathways in Europe DEVELOPING AND ADJUSTING ADAPTATION PATHWAYS (Setting, orienting, and recalibrating the compass) Source: World Bank team inspired by the IPCC graphic in IPCC AR6 WG2 report. Link CLIMATE RESILIENT DEVELOPMENT 2100 lower warming / higher climate resilience higher warming / lower climate resilience 2050 major events / new evidence causing the re-evaluation of adaptation plans and measures adjustment of adaptation pathways 2030 following trigger points (green/red is associated with more/less options to adjust adaptation pathways and more/less possibili- ties of pathways with lower climate impacts when concurring with stronger/less mitigation 2024 and lower/higher warming scenarios) OBJECTIVE: National Adaptation Plan with costed measures up to 2030 for time horizons 2030s - 2050s Consolidated adaptation pathways National and sectoral adaptation strategies for all sectors considering: • current climate risks and possible no- or low-regret measures • future climate risks and near-term decisions with long lifetimes • starting transformational adaptation and more complex decisions considering the need for systemic changes of sectors for the future protection and Other sectors management Health, social development Environment Forestry and Disaster risk Agriculture and Energy education Transport Urban Water Trigger points and adjustment examples: • Flood protection measures failing as • Higher financial losses due to wildfires • Heat related mortality crossing frequency and intensity increasing -> -> adapting forestry practices and scaling thresholds -> adjusting labor changing flood protection measures up wildfire prevention measures protection laws to protect workers (more di cult with hard infrastructure) Source: World Bank team inspired by the IPCC graphic in IPCC AR6 WG2 report. Link. Overview of the Literature and Methodologies for Costing cca 43 Building resilient futures in the face of evolving adaptation costing studies—have focused to date, climate risks, including compound, multi-hazard, aims to maintain current activities and systems. and disruptive events, requires developing Transformative adaptation (which involves scaling up comprehensive investment packages for CCA and activities or systems) and transformational adaptation DRM with a mixture of options that evolve along (which involves moving to different ones) will require with them and can be justified in economic terms. going beyond existing approaches toward more These can be framed in terms of three complementary strategic analysis and systems thinking, as highlighted building blocks: in the EU Adaptation Mission, taking into account the long lead times for planning and the likely need for • No-regret actions. Europe already incurs large societal and governance change.121 Changing coastal economic costs from climate extremes and climate risks, for example, which may necessitate variability, and these are growing. Reducing these major changes in land use, settlements, and activities, costs with (targeted) low- and no-regret actions, may also require the alteration of institutional and such as enhancing early warning systems, will yield governance structures to deliver societal change.122 net economic benefits today. Interest is increasing in systems approaches to addressing such complex and multi-objective policy • Climate-smart design, especially to address lock-in. issues as transformational adaptation. A range of In some cases, taking advantage of cost-effective methods is being piloted, including social network opportunities for early action can avoid locking in analysis, systems dynamic modeling, and others.123 large economic costs in the future. These While these can be useful for mapping risks, their opportunities arise with actions or decisions that application to adaptation is both complicated and involve long lifetimes or path dependency and will time and resource intensive. be difficult or costly to reverse later—for example, the designing of new infrastructure that is climate A menu of approaches, frameworks, and resilient. methodologies is available to cost CCA measures. Figure 8 shows the flow of decisions needed to cost • Low-cost preparatory and early actions taken to CCA measures according to different needs, improve future decisions, effectively providing objectives, and available resources, and information, option value. This involves developing adaptive which will be further described in this section. There management plans (that is, adaptation pathways) is no single blueprint or approach for costing CCA, for decisions that have long lead times or involve and the appropriate method depends on the specific possible large-scale but uncertain impacts in the objectives and the level and types of CCA cost future. The development of long-term coastal assessment. As a first step, it is important to define plans, for example, can be the start of more the aim of the CCA costing—that is, whether it is to transformational adaptation, as it must take into support financial planning, sectoral planning, consideration broader issues, such as societal implementation of NAPs or NASs, reporting on CCA perspectives and governance, in addition to expenditures, or assessment of the cost-effectiveness technical options. of CCA programs, among others. This choice drives the selection and use of the appropriate approach, Looking ahead, countries will need to start shifting methodology, and steps. The selected approach to from studies to inform incremental adaptation to CCA costing affects, in turn, the parameters ones that will enable transformational adaptation. considered, such as the time horizon for cost Incremental adaptation, on which studies—including estimates. Key approaches include a “science-first” 121 IPCC. 2018. Annex I: Glossary. Link. 122 ClimateReadyClyde. 2020. Resilient regions: Clyde Rebuilt. What does transformational adaptation look like? Link. 123 Martinez-Hernandez. 2022. System dynamics modelling and climate change adaptation in coastal areas: a literature review. Link.; Zarghami and Dumrak. 2021. A system dynamics model for social vulnerability to natural disasters: disaster risk assessment of an Australian city. Link. Overview of the Literature and Methodologies for Costing cca 44 or “top-down” (modelled or economic-based) Adaptation Plan cycle or multi-annual plan—to approach, which focuses more on how CCA pathways inform short-term decision-making and the divisions could cost-effectively minimize potential residual between budget lines; and an “adaptive management” impacts in the future; a “policy-first” or a “bottom- (“hybrid”) approach, to allow for better planning and up” (investment needs-, program-, or project-based) adjustment of CCA plans, implementation, and approach, focusing more on assessing the current budget planning as more information becomes CCA needs—for example, in the next National available. Figure 8. “Building blocks” and flow of decisions for costing CCA measures CONSIDERATIONS THREE APPROACHES EXAMPLES • Time horizons considered • Science first • Science first: COACCH, • Start with CC projections or • Policy first Germany APPROACH wiht policy questions • Adaptive management • Policy first: Austria, France, • Focus on determining the ("hybrid“) / adaptation UK, Romania, Bulgaria costs of CC change or the pathways • Adaptive management: costs of CCA measures see case studies under this report CONSIDERATIONS THREE APPROACHES EXAMPLES • Policy question • National • National: NAP costing • Granularity and detail of • Sectoral (Bulgaria, Romania; information available Germany, etc.); climate • Program/investment ANALYSIS LEVELS budget tagging (Austria, • Desired specifity of analytics France, etc.) & complexity • Sectoral: Austria, Spain, Germany, Netherlands • Program/investment: Netherlands CONSIDERATIONS THREE APPROACHES EXAMPLES • Between complexity & • No- and low-regret • No-regret: EWS, capacity proritization of adaptation adaptation building • Improving or changing • "Climate smart“ design, • Climate-smart: buildings MEASURE TYPES systems including "decision-making considering temp increase • Mainly adapting to the under uncertainty" • Early adaptation: forest current or future • Early adaptation activities ecosystems • Adaptation as primary or secondary objective CONSIDERATIONS TWO OPTIONS EXAMPLES • Modelling of climate • Top-down (economic based) • Top-down: impacts for science first analysis, EC studies, Austria, based on sector integrated Germany, Bugaria, Spain • Economic analysis assessments/damage • Analysis of future scenarios costs, IAMs, CGE, macro- • Bottom-up: structural/econometric France, Netherlands, ANALYTICS METHODS models for econ. modelling Austria, see case studies of CC impacts & CCA costs under this report • Bottom-up (investment/ project-based): used for policy first analysis, based on specific costing, IFF (or variation), DM support tools, DM under uncertainty to determine CCA costs Source: World Bank. Note: CC = Climate change; DM = Decision-making; EQ = Earthquake. Overview of the Literature and Methodologies for Costing cca 45 O B J E CT I V E S A N D A M B I T I O N O F A DA PTAT I O N future impacts of climate change, to what extent adaptation can reduce these impacts (the benefits), The objective of any CCA costing analysis is crucial and how much this action might cost.124 A further and will affect key parameters, including the level of trade-off arises with the impacts of climate change adaptation, the cost, and the residual impact after that remain after adaptation—that is, the level of adaptation. At the start of a CCA costing analysis, residual damage—because reducing impacts to zero decision-makers have to choose their objective and, through adaptation is often costly or impossible hence, the type of analysis. In simple terms, the costs (Figure 9). of CCA can be assessed by estimating the current and Figure 9. Benefit and Costs of Adaptation and Residual Impacts of Climate Change Source: UNFCCC 2007,125 adapted from Boyd and Hunt 2004.126 CCA costs and benefits can help inform policy and projects.128 These are important because they investment decisions, but the economic rationale recognize that adaptation can differ among levels of for adaptation has to be identified, and it must complexity and in terms of the focus of the investment: deliver value for money.127 Investing in adaptation involves challenges from an economic perspective. • Climate resilience (climate-proofing) of projects First, for anticipatory (proactive) adaptation, benefits involves integrating adaptation into investments, arise in few cases and thus, due to discounting, can with adaptation as a secondary objective. An be low (in present value terms) compared to upfront example of climate-proofing is the inclusion of costs. Second, the projected impacts under climate adaptation measures in a planned road project. change can vary according to the scenarios The aim is to assess adaptation options (and their considered, which means a risk of underinvesting or marginal costs and benefits) to manage climate overinvesting in adaptation—that is, a potential for risks to the underlying investment to ensure it regrets. delivers its primary benefits in a changing climate. The multilateral development banks, including Multilateral development banks, such as the those in Europe, have developed climate risk European Investment Bank and the European Bank management (CRM) systems for climate-proofing for Reconstruction and Development, have devised investments. These frameworks have been in place typologies for looking at adaptation investment for many years and are now evolving to meet the 124 UNEP. 2016. Adaptation Gap Report 2016 Link.; See also UNEP. 2023. As climate impacts accelerate, finance gap for adaptation efforts at least 50% bigger than thought. Link.; Climate-ADAPT. 2023d. Tools - Assessing adaptation options. Link.  125 United Nations Framework Convention on Climate Change (UNFCCC). 2009b. Potential Costs and Benefits of Adaptation Options: A Review of Existing Literature. Link. 126 Boyd, R., and A. Hunt. 2004. Costing the Impacts of Climate Change in the UK: Overview Guidelines. 127 UNFCCC. 2009a. Assessing the Costs and Benefits of Adaptation Options. Link. 128 EIB. 2022. Climate Change Adaptation and Economics and Investment Decision-making in the Cities - “How to Guide” and Case Studies. Link.; European Bank for Reconstruction and Development (EBRD). 2023. The EBRD Climate Adaptation Action Plan 2023–2025. Link. Overview of the Literature and Methodologies for Costing cca 46 need to adopt a programmatic (upstream the project. An example is a new coastal protection approach) and to encourage consideration of how scheme to manage rising sea levels. In this case, best to identify risks and integrate adaptation the economic benefits of the investment are the (Figure 10).129 adaptation benefits it delivers, which are assessed against the adaptation costs (although, it should be • Adaptation projects involve targeted investments to noted, an adaptation project can also include co- address climate risks and deliver adaptation, with benefits, or a project can have several primary adaptation as the primary or principal objective of objectives, one of which is adaptation). Figure 10. Guiding principles of climate risk management for climate-proofing projects CONCEPT PREPARATION IMPLEMENTATION PHASE PHASE PHASE Understand the Move Identify the project and focus on upstream project type what matters Climate Risk Management Use decision-led climate scenarios to inform risk assessment Identify adaptation options, taking Undertake Climate Risk timing and downstream and Adaptation uncertainty into strenghening Assessment account Source: Watkiss, P. et al. 2020. To date, the focus of CCA has been on incremental smaller-scale or marginal adaptation projects that adaptation, as in the examples mentioned above, maintain the status quo. Box 3 defines incremental with little evidence or economic analysis of versus transformational adaptation.130 There has transformational adaptation. Most studies and been no economic analysis of more transformational adaptation costs relate to incremental adaptation— adaptation—that is, of more systemic actions that that is, to allowing current activities and systems to aim to do different things, such as in response to the function under climate change. Climate-proofing limits of adaptation (see later discussion). investments have been emphasized, delivering 129 Watkiss, P. et al. 2020. Principles of Climate Risk Management for Climate Proofing Projects. Link. 130 Fedele, G. et al. 2019. Transformative Adaptation to Climate Change for Sustainable Social-Ecological Systems. Link. UNFCCC. Concepts, approaches and examples of Transformational adaptation. Link. Roka, K. 2018. Climate Change Adaptation. Link. Overview of the Literature and Methodologies for Costing cca 47 BOX 3. INCREMENTAL VERSUS TRANSFORMATIONAL ADAPTATION • Incremental adaptation is adaptation that maintains the in anticipation of climate change and its impacts.132 essence and integrity of a system or process at a given Linked to transformational adaptation is transformative scale.131 change, which is systemwide. It goes beyond technological change through the consideration of social • Transformational adaptation is adaptation that changes and economic factors that, with technology, can bring the fundamental attributes of a social-ecological system about rapid change at scale.133 Adaptation costs vary with the level of ambition or • Maintenance of a constant absolute risk level the objective and whether an objective can be set means maintaining a constant level of residual from the perspective of economic efficiency or risk damage, which involves more protection and levels. As Figure 9 shows, adaptation is associated higher adaptation costs, resulting both from with trade-offs among its costs, its benefits, and the socioeconomic change (and with a rise in assets at residual damage after it. The choices involved have to risk) and increasing climate change. be made by policy-makers or society, rather than through an appraisal of options. An example are the • Protection to a risk-intolerant level means reducing choices that need to be made in setting an adaptation average annual losses to very low levels, leading to objective for protection from coastal or river flooding. very low residual damage but involving very high In simple terms, this is a choice between how much costs. to spend on adaptation versus how much residual risk are stakeholders prepared to accept. In more • Protection to the (economic) optimal level of specific terms, the choice can be among several adaptation involves investment in adaptation to the objectives:134 point where the marginal costs and benefits are equal—that is, the economically optimal response. • Maintenance of existing protection infrastructure It usually leads to lower levels of adaptation and involves additional maintenance costs in the future costs, as investments are not in highly costly but no additional enhancement or new infra­ actions, but residual damage is higher. Defining structure (that is, business as usual / do nothing). the optimal level is very difficult, however, because In this case, the costs are low, but of course residual of the wide range of potential climate change damage is high, and it increases over time with impacts, so pursuit of this objective may lead to climate change. maladaptation. • Protection to a constant relative risk level The differences in adaptation costs among these (acceptable risk) involves setting a risk protection objectives can be significant.135 One study reports standard to protect, for example, against a 1-in- these costs for river floods can vary by a factor of four 100-year event. The costs of protecting to this between the economically optimal action and that same level increase over time, as additional which results in the least residual damage.136 Similar infrastructure investment is needed to deliver the differences exist for coastal protection.137 Also same protection under a changing climate. important to stress is that adaptation objectives are not set consistently among countries or among 131 Mach, K. J. et al. 2014. “Annex II: Glossary.” Link. 132 Mach, K. J. et al. 2014. 133 Möller, V., R. et al. 2022. “Annex II: Glossary.” Link. 134 Watkiss, P., and R. A. Betts. 2021. “Method.” Link. Nicholls, R. J. et al. 2019. Global Investment Costs for Coastal Defense through the 21st Century. Link. 135 Aerts, J. C. G. H. 2018. A review of cost estimates for flood adaptation. Link. 136 Ward, P. et al. 2017. “A Global Framework for Future Costs and Benefits of River-Flood Protection in Urban Areas.” Link. 137 Nicholls et al. 2021. A global analysis of subsidence, relative sea-level change and coastal flood exposure. Link. Overview of the Literature and Methodologies for Costing cca 48 hazards within individual countries, so adaptation main types of studies in the adaptation cost literature costs can vary substantially. The inconsistency (see Figure 11):138 reflects current practice across Europe among countries (the Netherlands, for example, has much • Science-first studies start with climate model higher coastal protection standards than other projections (hence, “science first”), then model Member States) and within countries (for instance impacts of future time slices in the medium to long adaptation choices depending on spatially diverse terms (for example, for the 2050s and 2080s), and impacts of heat and floods within countries). Some then model technical adaptation options and their objectives may be based on outcomes from a benefit- costs. Examples include the studies of coastal or cost analysis (that is, the benefit-cost ratio of various river flood adaptation reported in many European measures), while others—for instance, those and national studies. involving the risk of fatality—may be based on acceptable risk protection levels (noting that even • Policy-first studies are directed specifically toward the latter can vary, for example, between a 1-in-100 supporting adaptation decisions in the near term or 1-in-1,000-year standard). In short, setting and grounded in policy or project decisions. adaptation objectives is context-specific, and it is not Examples might include the actions specified in a possible or realistic to impose specific framing and country’s National Adaptation Plan priorities for risk-preference levels across all hazards and the next five years or the consideration of adaptation countries in the EU. in a project investment decision, such as a new hydropower plant under construction. A P P ROAC H E S TO CO S T I N G CCA • Adaptive management (“hybrid”) studies consider both policy and science, often using adaptation Modeling adaptation in stylized medium- and long- pathways approaches. Examples might include term studies is not the same as doing so in near-term, studies that look at the space-time clustering for real-world policy analysis. While many modeling selected infrastructure or those that consider no- studies tell us adaptation is extremely effective in regret measures first while more information on reducing climate impacts in the 2050s, they do not adaptation options for different sectors is becoming tell a policy-maker “what to do today.” There are three available. 138 Ranger, N. et al. 2010. “Adaptation in the UK: A Decision-Making Process”; ECONADAPT. 2016. The Economics of Climate Change Adaptation. Link. Overview of the Literature and Methodologies for Costing cca 49 Figure 11. Science-first, policy-first, and hybrid (adaptive management) approaches SCIENCE FIRST Assess climate change (projections) Assess relevant impacts (I-A) ADAPTIVE MANAGEMENT („HYBRID“) List potential adaptation options Structure policy or project objective and context Assess potential adaptation options Assess climate risks, with pathways from current to long-term (with uncertainty) POLICY FIRST Identify interactive adaptation packages Structure policy questions/objectives Assess urgency – Access vulnerability/impact information what to prioritize now, what comes later Purpose strategies and options Monitor, evaluate and learn (continuously) using feedback to alter strategies Assess strategies and options Evaluate outcomes Source: Modified and reproduced from EconAdapt, adopted from Dessai and Hulme (2017)139 and Watkiss et al. (2014a). Science-first studies140 can raise awareness and framework, in which the analysis is run for one provide “headline” estimates of the costs and emissions scenario and climate model projection at a benefits of adaptation. They can serve advocacy time for multiple runs (and, in theory, for many runs purposes by highlighting the costs of inaction and across the ensemble in some studies). The providing useful information for high-level planning. consideration of existing adaptation in modeling Most such studies make use of sector biophysical frameworks also varies, so the analysis may not reflect and integrated assessment models (IAMs), and risk reduction measures already in place—for sometimes these results are fed into macroeconomic example, studies of the health effects of extreme heat models. The CCA measures considered are technical may not factor existing heat-alert schemes into and generally based on medium timelines (to 2050s) assessments of impacts or additional adaptation. and long timelines (to 2100s), in line with climate Overall, these studies show that CCA pays off, and model outputs. This is, broadly, the same approach they can be a starting point for national dialogue to followed by European Commission (EC) studies such encourage more detailed adaptation studies—a as COACCH141 and PESETA IV. Science-first studies perspective followed in part in Chapter 2, use case 1, tend to be normative research and consider technical for the case study on Romania. Science-first studies adaptation options based on expert and engineer do not, however, provide all the information needed assessments. A spectrum of projected climate for real-world policy and adaptation decisions. impacts is often addressed based on an “if-then” 139 Dessai S., and M. Hulme. 2017. “Assessing the Robustness of Adaptation Decisions to Climate Change Uncertainties: A Case Study on Water Resources Management in the East of England.” Link. 140 Watkiss et al. 2014a. 141 CO-designing the Assessment of Climate Change Costs (COACCH). 2021. The Economic Cost of Climate Change in Europe: Report on Policy Results. Link. Overview of the Literature and Methodologies for Costing cca 50 Policy-first studies142 recognize that national policy- • Adaptive management, also called iterative risk makers and project investors need to decide today. management, is an iterative cycle of monitoring, They can support decisions on, for example, what to research, evaluation, and learning—that is, a prioritize in a national plan for the next five years or process to improve future management strategies. how to include climate resilience in the design of a hydropower plant with a long lifetime. These studies • Dynamic adaptation route maps focus on DMUU pursue the adaptation objective with a “real-world” and identify adaptation tipping points (or turning policy or project focus. They require an advanced points)—the points at which particular actions are understanding of climate change impacts, non- no longer adequate.144 climate policy, and existing adaptation. They also include consideration of nontechnical or soft options At the project level, the use of such tools as DMUU (green versus grey), as well as the enabling activities for investment decisions is growing more prevalent, needed to deliver adaptation, including capacity as is the application of iterative risk management building and policy, standards, and market-based (or adaptive management) approaches in policy instruments to support delivery. studies (Box 4); the latter help with the prioritization and sequencing of adaptation over time as part of a Adaptive management (“hybrid”) approaches that cycle of learning, evaluation, and revision. Most combine the science and policy approaches can models are built only in a limited manner to represent also inform real-world adaptation decisions in the cascading impacts from interacting climate hazards short term, as these policy-first decisions (computable general equilibrium, or CGE, models increasingly are made using adaptation pathways can be suitable, but many assumptions have to be for policy or sector analysis.143 “Adaptation made). One way to ensure short-term policy relevance pathways” is a generic term denoting the analysis of and enhance the scientific basis of adaptation studies adaptation options over time for evolving levels of is to look at the clustering over space and time of risk. It has been applied in several different ways: selected assets, sectors, or infrastructure with climate stressors or natural hazards.145 Elements of • Adaptation roadmaps and pathway frameworks the hybrid approach are considered in the case consider portfolios of adaptation that change over studies presented in the next chapter. time to allow analysis of the timing and sequencing of adaptation and identify priorities. 142 Watkiss et al. 2014. 143 Haasnoot, M. et al. 2013. “Dynamic Adaptive Policy Pathways: A Method for Crafting Robust Decisions for a Deeply Uncertain World.” Link; Reeder and Ranger 2011.; Climate-ADAPT. 2023c. How to factor in uncertainty. Link.  144 Hassnoot, M. et al. 2013. Dynamic adaptive policy pathways: A new method for crafting robust decisions for a deeply uncertain world. Link. 145 See studies on critical infrastructure in Annex 1 and Bonnafous, L., and Lall, U. 2021. “Space-Time Clustering of Climate Extremes Amplify Global Climate Impacts, Leading to Fat-Tailed Risk.” Link. Overview of the Literature and Methodologies for Costing cca 51 BOX 4. ADAPTATION PATHWAYS AND ADAPTIVE MANAGEMENT To improve their planning for climate change adaptation, results and learn about different processes (for example, several European countries are conducting analyses that Austria’s PACINAS149 top-down and bottom-up combine science-first and policy-first approaches. assessments for national budgeting). Austria146 and Germany147 have undertaken such studies for decades, producing a wealth of information. In other Some international studies have also considered the countries, high-quality studies exist for certain sectors and analysis of average changes of climate impacts resulting climate hazards—for instance, flooding in the Netherlands from climate change and possible tail events, i.e. rare and drought in Spain—but are lacking for others. A few occurrences that are well outside of the norm (for example, countries, such as France,148 have started taking the policy- hurricanes in Jamaica),150 as well as compound risks and first approach, and further sectoral assessments are being cascading impacts, but this practice is still in its infancy, as developed. In some cases, an assessment is carried out most climate hazards present few data points of extreme using several methodologies to allow for comparison of value representative of rare tail events.151 A N A LY S I S L E V E L S F O R CCA CO S T I N G range from simple costing of prioritized options to cost-benefit appraisal (although the latter is rare). Science-first, policy-first, and adaptive management Adaptation measures are mostly considered in terms studies can be undertaken at several levels. For a of what makes sense in the current political context. climate change adaptation study, the level depends Taking into account trade-offs and weighing on the level and granularity of the climate information numerous sectoral and national or local priorities, available, the details of sectoral studies, and/or the analyses may also examine no-regret adaptation policy question or objective at hand. Currently, options known in the literature, such as early warning national studies tend to be quite broad, while project systems. They may also look at national adaptation investment decisions are quite specific. This section expenditure, or climate budget tagging,152 allocating focuses on policy-first and hybrid approaches, as shares of expenditure to adaptation and then these are used throughout the report. Examples from extrapolating outcomes from these based on climate past studies using the science-first approach, such change impact scenarios. While analyses of NAP as the COACCH project, are also showcased to costs and climate budget tagging exercises can be provide an overview. beneficial for improving inter-ministerial discussion and collaboration, they are often conducted at quite At the national level, studies may involve the costing high levels and therefore would require more in- of adaptation priorities identified in a country’s climate depth sectoral studies that would have been risk assessment and National Adaptation Plan. developed previously to taking decisions on This pertains especially to the investment needed to adaptation. Some approaches consider multi-hazard deliver the first cycle of adaptation (that is, the first implications and cross-sectoral aspects, and recent five years). The methods applied in such studies interest has turned to developing storylines. These 146 Steininger, K. W. et al. 2015. “Climate Change Impacts at the National Level: Known Trends, Unknown Tails, and Unknowables.” . 147 Tröltzsch, J. et al. 2012. Kosten und Nutzen von Anpassungsmaßnahmen an den Klimawandel - Analyse von 28 Anpassungsmaßnahmen in Deutschland.; Institute for Ecological Economy Research (IÖW). 2021. Economics of Climate Change Adaptation - Work Package 3: Enhancing the Macroeconomic Model PANTA RHEI and Simulation of Climate Change Impacts and Adaptation Strategies. 148 Depoues, V. et al. 2022. 149 PACINAS = Public Adaptation - Investigating the Austrian Adaptation Strategy. 150 Nordhaus, W. 2011. The Economics of Tail Events with an Application to Climate Change. ; Weitzman, W. 2011.“Fat-Tailed Uncertainty in the Economics of Catastrophic Climate Change. ; Nordhaus, W. 2012. Economic Policy in the Face of Severe Tail Events. ; Weitzman, W. 2014. “Fat Tails and the Social Cost of Carbon.” 151 Wagner, G., and Weitzman, M. L. 2018. “Potentially Large Equilibrium Climate Sensitivity Tail Uncertainty.” Arif, M. et al. 2021. “Evolving Extreme Events Caused by Climate Change: A Tail Based Bayesian Approach for Extreme Event Risk Analysis.” ; Zscheischler, J., S. et al. 2018. “Future Climate Risk from Compound Events.” ; Flyvbjerg, B. 2020. “The Law of Regression to the Tail: How to Survive Covid-19, the Climate Crisis, and Other Disasters.” 152 The CCA cost estimates produced were, for example, used to inform national green budgeting in France (Alexandre, S. et al. 2019. Green Budgeting: Proposition de méthode pour une budgétisation verte. Link.). Overview of the Literature and Methodologies for Costing cca 52 approaches are broadly what countries have followed adaptation pathways, for example, tend to align well to create NAPs and set nationally determined with coastal adaptation, whereas decision scaling is contributions under the Paris Agreement and national used more for water sector decisions. This perspective and local budgeting for three-to-six-year planning. is followed in part in Chapter 2, use case 3, for case This perspective is followed in part in Chapter 2, use studies on Croatia and Romania, as well as the case 1, for case studies on Bulgaria and Romania, fictional example of Aurelia. along with elements of a hybrid approach. At the sectoral level, studies may involve more TY P E S O F CCA M E A S U R E S detailed identification and the costing of sector adaptation strategies and plans. They may include For policy and hybrid studies and at all levels of the integration of climate adaptation strategy and analysis, different types of climate adaptation policy (mainstreaming) and of adaptation into sector measures can be considered. They support decisions medium-term and investment plans. Following the with impacts on planned expenditures in the short to science-first approach, sectoral assessments usually medium terms, rather than hypothetical decisions for examine the effect of climate change on one or a few mid-century. The adaptation economics literature specific sectors, such as agriculture, forestry, and has identified types of early investments that are transportation. After the climate risks and impacts likely to pass a cost-benefit test. Watkiss and Betts are assessed, either through detailed modeling or by (2021), for example, enumerate three kinds of early using “lighter” methods, adaptation measures adaptation that are supported by strong economic designed specifically for the sector are proposed. rationales (Figure 12, Figure 13).154 This perspective is followed in part in Chapter 2, use case 2, for the case study on Sweden. 1. Measures that address the current adaptation gap with “no-regret” or “low-regret” actions that At the program, investment portfolio, or project reduce risks associated with current climate level, studies may involve detailed decision support extremes and variability, as well as build future tools. Examples include DMUU and other such tools climate resilience. that focus on flexibility and robustness and on the value of information, the minimizing of regrets, or the 2. Early interventions to ensure adaptation is encouragement of diversification or portfolios.153 considered in near-term decisions with long These studies usually consider multiple scenarios lifetimes—such as decisions to climate proof and climate models over the lifetime of the investment infrastructure—and therefore reduce the risk of and then identify adaptation options (and costs and “lock-in”; these may include the application of benefits) by applying such techniques as robust DMUU concepts, such as flexibility and robustness. decision-making, decision scaling, real option analysis, and dynamic adaptation pathways. These 3. Fast-tracking of early adaptive management approaches are needed because—unlike in DRM (adaptation pathway) activities, especially for studies—the spectrum of projected climate change decisions that have long lead times or involve impacts makes probabilities or probabilistic major future change; this can enhance learning approaches difficult to generate. No single approach and allows the use of evidence in forthcoming is “best”; the applicability depends on the type of decisions (option value). project, climate risk, and decision. Dynamic 153 Watkiss et al. 2014. 154 Watkiss, P., and Betts, R. A. 2021. “Method.” Link. Overview of the Literature and Methodologies for Costing cca 53 At the national level, for most risks, a portfolio of immediate decisions but targets risks that will arise in adaptation actions is needed. This means a the future, and early adaptive management seeks to combination of all three “building blocks,” each with inform future investment for future risks. While all a different timescale of risk and investment. No- and involve some action in the next five years, the nature low-regret options are implemented and deliver of the investment is different. benefits now, while addressing lock-in involves Figure 12. Iterative risk management and options for early adaptation Current (now) Near future (2020s) Longer-term (2050s) Current to Future Climate Risks Existing climate Emerging early trends & Future major climate variability and extremes changes in variability change Existing adaptation deficit Exacerbation of existing Potentially major new risks, risks, new risks emerge but high uncertainty Next few years Development time- Longer-term scales (e.g. to 2020s) (e.g. towards 2050) 3. Early action for Review and Major new long-term change update responses Adaptation Phasing 2. Climate proofing and mainstreaming 1. No-regret adaptation 3. 2. 1. Act now Act iteratively as risks evolve Source: Overall figure adapted and updated from Watkiss et al. 2014b.155 The included graphs/maps included in the overall figure are: current climate/top left (from Watkiss et al. 2014b) and near future/top middle and longer term/top right (from IMPACT2C 2015). 155 Watkiss et al 2014b. The use of new economic decision support tools for adaptation assessment: A review of methods and applications, towards guidance on applicability. Climatic Change. Link. Overview of the Literature and Methodologies for Costing cca 54 Figure 13. Three types of early adaptation with strong economic rationales Is there a medium NO TIMING OF or large current RISK Is there a medium risk? or large long-term risk? YES YES Are there near-term Would initial action DECISION Would immediate decision with a long help prepare for QUESTION action generate lifetime and the risk long-term change/ benefits now? of lock-in? long lead times? YES YES YES NO 'Climate-smart' Early adaptation No- and low- regret TYPE OF design, including activities to support Watching brief - adaptation, including ADAPTATION decision making future decisions and periodic review building capacity under uncertainty action National portfolio of adaptation actions Source: Early adaptation priority framework in CCRA3. Watkiss (2021), updated from Warren et al. (2016). When defining a portfolio of adaptation actions, the be preferable to ensure adaptation is most effective potential benefits and costs must be carefully and delivers co-benefits, as well. It is important to weighed. While it is essential to consider green design identify the main objectives of the programs and features in all programs, as aligned with the Green investments and then carefully evaluate the benefits, Deal and other strategies, they can be complex and as these are generally quite localized and investment- may involve trade-offs. Green solutions can impose and context-specific. They also depend on whether costs—for instance, opportunity costs of land or the main goal is adaptation or risk reduction, as maintenance costs—that are important to include. A opposed to mostly climate-proofing or other mixture of green and grey adaptation solutions may objectives. Examples are outlined in Box 5. Overview of the Literature and Methodologies for Costing cca 55 BOX 5. CONSIDERING BENEFITS IN THE COSTING OF CCA MEASURES Acting on climate adaptation can be economically Considering benefits is important when selecting, beneficial and have broader benefits, as well. Investments prioritizing, and designing CCA measures, particularly can reduce direct losses resulting from disaster and climate when they integrate green elements. This is illustrated by impacts while enhancing growth and providing trade and two practical examples. job opportunities, productivity gains, emission reductions and air quality improvements, ecological value, and When a city wishes to adapt to climate change biodiversity.156 Studies show that adaptation can, for example, be extremely cost-effective in reducing economic Local urban decision makers pursuing climate change losses from climate change–related coastal and river adaptation need to consider, among other things, average floods.157 A recent report from the World Bank and the EC temperature changes, localized vulnerability to various reviewing more than 70 investments across Europe has climate-related risks (in addition to others, such as seismic also shown that investments with a portfolio of measures risk), and urban heat island (UHI) effects.160 Starting with addressing disaster risks can deliver a triple dividend, with local development strategies and plans, the city can numerous co-benefits.158 consider a portfolio of measures, some of which may have trade-offs. Planting trees in a city, for instance, can be Triple dividend benefits, which can be achieved for a highly beneficial if implemented at scale, providing number of DRR investments, are less obvious for CCA considerable cooling effects, as well as other benefits, such investments because the latter present more trade-offs. as energy savings, air quality improvements, and Much has been made of the potential triple dividend of recreational value.161 But if the opportunity costs of land resilience, and this is also being cited in the context of use for large green spaces are high, or planting requires adaptation. In practice, not all individual adaptation actions “retrofitting” of infrastructure—for instance, on the sides of deliver a triple dividend, and there are often important streets—or is implemented piecemeal and according to a trade-offs. Seawalls, for example, may provide high levels of design unsuitable for addressing multiple climate risks, the coastal protection, but they may also lead to coastal effort may be costly and not achieve desired outcomes. “squeeze,” causing the loss of natural habitats. Alternatives It is important, therefore, to ensure that such projects can with greater economic benefits, such as nature-based at least have the value of demonstrating approaches and solutions, tend to be more effective at lower risk levels.159 types of investments to be potentially then replicated at Trade-offs may also exist between the costs of various scale. For green roofs or white, blue, or green design and options—notably, capital, operating, and opportunity measures,162 it may be more suitable to develop costs—and some of the additional policies needed around standardized criteria or regulations so they are considered protection and enforcement. It is possible, however, both to for new buildings, or to consider multifunctional measures provide greater resilience and generate substantial social that are highly effective in cooling, enhancing energy and environmental co-benefits by combining portfolios of efficiency, and addressing other hazards or environmental measures—for example, grey and green measures. problems (such as flooding and air pollution).163 When implemented based not only on knowledge drawn from the literature but also on localized assessments, these 156 An EU assessment of the macroeconomic impact of the European Green Deal suggests that the GDP in 2030 is projected to be 0.5% above the baseline in the best-case scenario as a result of increased in private consumption due to use of carbon revenues to reduce value added tax (VAT) and to support energy efficiency investments. In the EU, employment in renewable energy has more than doubled from 660,000 to 1.51 million jobs between 2004 and 2018. (EC. 2022. Economic impacts of the green transition. Link.); Meanwhile, investing in adaptation in the EU is expected to create a total of 500,000 additional jobs (direct and indirect) by 2050. (EC. 2014. Assessing the Implications of Climate Change Adaptation on Employment in the EU - Final Report & Annexes. Link.); UN findings reveal that adaptive agricultural measures such as solar-powered irrigation, weather alert systems, and new crop varieties could avoid losses in global agricultural yields by up to 30 percent by 2050 (UN. 2023. Climate Action Fast Facts. Link.). 157 Lincke et al. 2018. D2.3. Impacts on infrastructure, built environment, and transport Deliverable of the H2020 COACCH project. Link.; Lincke and Hinkel. 2018. Economically robust protection against 21st century sea-level rise. Global Environmental Change 51, 67-73. Link. 158 World Bank. 2021. Economics for Disaster Prevention and Preparedness - Investment in Disaster Risk Management in Europe Makes Economic Sense. Link. 159 Dadson SJ et al. 2017. A restatement of the natural science evidence concerning catchment-based ‘natural’ flood management in the UK. Proc. R. Soc. A 473: 20160706. 160 WB. 2020a. Analysis of Heat Waves and Urban Heat Island Effects in Central European Cities and Implications for Urban Planning. WB, Washington, DC. Link. 161 Soare, A. L., et al. 2011. “Benefits and Costs of Street Trees in Lisbon, Portugal.” Urban Forestry & Urban Greening 10 (2): 69–78. 162 Vienna case study in WB and EC 2021; white, blue, green measures are defined in the glossary. 163 LifeMedGreenRoof. 2023. LifeMedGreenRoof Project - Constructing Two Demonstration Green Roofs to Illustrate the Potential of Meeting Environmental and Energy Targets. Malta Competition and Consumer Affairs Authority. 2017. Green Roofs - Criteria for the Planning, Construction, Control and Maintenance of GREEN ROOFS. ICS: 27.160. Overview of the Literature and Methodologies for Costing cca 56 measures often yield the highest benefits in terms of scheme in Portugal, for example, encourages private forest reduced vulnerability, demonstration value, and/or health owners to plant native, fire-resilient species in fire-prone and well-being. Ways may also be considered to reduce areas.167 indoor temperature, such as passive cooling,164 while early warning systems and heat action plans are crucial to Nevertheless, benefits from adaptation need to be carefully reducing heat-related mortality and morbidity, especially evaluated, as adaptation may include trade-offs in terms of among the elderly, people with chronic conditions, and reducing the economic and ecological value of the forests. other vulnerable populations.165 In practice, various stakeholders are weighing these potential costs against objectives other than reducing fire When forestry and civil protection agencies wish to reduce risks, such as CCA (carbon storage potential), timber wildfire and other risks production, and recreational value, and other DRR measures, such as fuel breaks168 and management. While Adaptive forest management and improvements in forest some countries have already initiated studies, many more resilience (such as diversifying tree and plant composition are needed to identify forest management strategies that and varying the heights of and spacing between trees) can can achieve multiple goals and still be effective against yield substantial benefits, including reducing the risks of extreme and compound risks. These risks include natural wildfire, air pollution, and greenhouse gas emissions and hazards such as heat and wildfires, and other compounding increasing biodiversity.166 Such adaptation measures have factors such as forest health tipping points and die-off.169 been adopted in many European countries. A pilot payment A N A LYT I CA L M E T H O D S F O R CO S T I N G CCA o Advantages: MEASURES + They have been applied mostly as part of cross- country or global studies, as well as in several Various methodologies can be used for the analysis country case studies in Europe (Austria, of climate impacts and adaptation measures to Bulgaria, Germany, Spain). address them. The advantages and disadvantages of two types of approaches—five top-down and five + They are theoretically sound and thoroughly bottom-down—can be summarized as follows: quantitative in analyzing impacts. • The top-down approaches are modeled or o Disadvantages: economic based: (a) sector integrated assessment - They are used mostly for climate hazards and and ; (b) IAMs; (c) computable general equilibrium sectors where relationships in terms of impacts modeling; (d) macro-structural modeling; and and adaptation effectiveness are well known (e) econometric modeling. - Looking at variability and extreme hazard scenarios can be complicated and costly. 164 Viguie, V., et al. 2020. “Early Adaptation to Heat Waves and Future Reduction of Air-Conditioning Energy Use in Paris.” Environ. Res. Lett. 15: 075006. 165 Hunt, A., et al. 2017. “Climate and Weather Service Provision: Economic Appraisal of Adaptation to Health Impacts.” Hasan, F. et al. 2021. “Effective Community-Based Interventions for the Prevention and Management of Heat-Related Illnesses: A Scoping Review”. 166 Müller, M. M. et al. 2020. Forest Fires in the Alps - State of Knowledge, Future Challenges and Options for an Integrated Fire Management. .; Keskitalo, E. et al. 2015. The Role of Forestry in National Climate Change Adaptation Policy: Cases from Sweden, Germany, France and Italy. 167 OECD. Forthcoming. “Taming Wildfires in the Context of Climate Change: The Case of Portugal”. 168 Fuel breaks are strips or blocks of vegetation that have been altered to slow or control a fire and slow the spread of fire. 169 Reyer, C et al. 2015. Forest resilience and tipping points at different spatio-temporal scales: approaches and challenges. Journal of Ecology, Vol. 103, No. 1 (January 2015), pp. 5-15. Overview of the Literature and Methodologies for Costing cca 57 - The adaptation analysis is highly stylized, certain use cases can reduce this problem and usually focused on technical options, and allow for more comparability. centered on a 2050s horizon. D I S AG G R E G AT E D E L E M E N T S O F T H E CO S T S - They are generally complex, with a high need O F CCA M E A S U R E S for data and expertise (economic impact assessments, sectoral assessments, adaptation After having taken the decisions above on overall effectiveness, and so on). approaches and methodologies, the costing of CCA measures comprises an additional choice on what • The bottom-up approaches are investment needs, types of costs to consider. This process will depend program or project based: (a) sector-, program-, on the type of adaptation intervention and will vary project-, and activity-based costing; (b) investment depending on whether its focus is a no-regret and financial flow (IFF) analysis; (c) variation of IFF adaptation action, a climate-smart decision, or an analysis; (d) decision support tools; and (e) DMUU. adaptive management approach. The simplest way to describe the process is to use the example of a no- o Advantages: or low-regret measure, which can generally be + They have been applied in several country case assessed in a number of steps, although the steps will studies in Europe (Austria, Germany, France, vary considerably with the context, information at Netherlands) and worldwide, mostly as part of hand, and exact measure costed:170 national studies. • Step 1: Identify the “sub-costs” of a measure. The + They provide practical information on adaptation sub-costs of an early warning system for heat, for to inform financing and implementation. example, would include (a) the fixed cost of setting up the early warning system (IT system, change of + They are simple and can be adapted or tailored; regulation, adjustment costs of the system, can be applied using semi-quantitative opportunity costs for economic actors to adjust to approaches; and have a low to medium need the regulation, and so on); (b) implementation cost for data (economic impact assessments, (forecasting, full- or part-time operating staff, sectoral assessments, and assessments of maintenance of the IT system, cybersecurity (if adaptation effectiveness). necessary), monitoring and evaluation to ensure enforcement and compliance, and so on); and (c) o Disadvantages: operating/resource/opportunity costs (health care - They focus on existing challenges, in addition and care home workers taking action when to known projections and climate risks. warnings are triggered, media announcements, operations that provide extra care to the vulnerable - They produce long lists of CCA measures, rarely groups, and so on). While all three types of costs considering economic efficiency and centered are covered in the literature, the fixed and on actions for this decade or a short-term implementation costs are generally easier to horizon. transfer for other case study analytics, while the operating costs are context- and location-specific - The comparability of findings is generally and therefore need additional surveys and limited, as they are tailored to country contexts. consultations to determine them for each case However, using similar methodologies for study specifically.171 170 EC. 2021. Better regulation toolbox: "Chapter 8 – Methodologies for Analyzing Impacts in Impact Assessments, Evaluations, and Fitness Checks.” Link. 171 Chiabai, A. et al. 2018. “Valuing Deaths or Years of Life Lost? Economic Benefits of Avoided Mortality from Early Heat Warning Systems.”; Hunt et al. 2017. Overview of the Literature and Methodologies for Costing cca 58 • Step 2: For all the sub-costs, identify lower and be aligned with, for example, the DMUU method used upper bounds. These are relevant to the country as part of a robust decision-making approach. context, area, hazard, and/or sector and should be Similarly, actions that are part of an adaptive determined from (a) literature reviews; (b) management approach, including adaptation databases; (c) expert estimations; and (d) surveys pathways, present additional costing challenges. and/or consultations with stakeholders. In Germany, for instance, various costs were • Step 3: Add up the sub-costs to estimate the costs calculated and considered in the prioritization of over the period of implementation. The total cost CCA measures based on multicriteria analysis. Costs can be expressed as an annual average or as a for 28 CCA measures were calculated based on (1) present value after discounting. This may require one-time capital expenditure (for measures to reduce estimating changes in costs over time, including as extreme heat impacts, this might include replacing a result of climate change (that is, how often the road asphalt with heat-resistant materials and early warning system is likely to be triggered per converting to green roofs); (2) ongoing costs (such as year in 2030 or 2050 versus 2024). additional required maintenance work on roads, annual maintenance work on green roofs, and time • Step 4: Consider the division of costs among spent by private households to maintain various economic actors. The additional hours of infrastructure); and (3) transaction costs (expen­ work for health care workers, for example, may be ditures for permitting a green roof, planning work for carried by the public sector for public hospitals or levee construction, and so on).173 With regard to by the private sector for private clinics; opportunity measures that are policy instruments, consideration costs for construction workers may have to be also had to include (1) costs of the political process carried by construction companies. Direct costs (developing the policy instrument); (2) inception linked to the intervention may arise from legal costs (changes to systems according to regulation); provisions, or indirect costs may be observed in (3) administration and implementation costs (mostly upstream or downstream markets or experienced for enforcement) and monitoring and evaluation by various stakeholders not directly targeted by the costs (monitoring of enforcement effectiveness and initiative or regulation.172 compliance or necessity to adapt the instrument, costs of fining for enforcement, and so on); and The costing of adaptation investments, which (4) opportunity costs (reduction of economic activity involve longer lifetimes and include those with as a result of regulation and so on). These costs were potential lock-in risks or path dependencies, is more then considered in an overall multicriteria analysis to complicated, because a spectrum of projected prioritize CCA measures in the country.174 As the climate impacts must be considered. The costing of costs were based on ordinal scales (low-medium- such measures as climate-proofing new infrastructure high), multipliers (X times higher cost compared to investment or determining the level of dedicated another compared measure), or monetary cost adaptation investment is challenging because of the ranges, the sum of the costs expressed in monetary potential for regrets (that is, for under- or overinvesting values represented a lower bound. in adaptation). In this case, the costing often has to 172 EC 2021. 173 GoG Umweltbundesamt. 2020. Vertiefte ökonomische Analyse eiinzelner Politikinstrumente und Maßnahmen zur Anpassung an den Klimawandel. Link. 174 The 10 criteria considered for MCA were (1) climate impact filter, (2) governmental action, (3) temporal urgency, (4) system relevance, (5) effectiveness, (6) costs, (7) implementability, (8) acceptance, (9) flexibility, and (10) synergies and conflicts with other policy areas. Overview of the Literature and Methodologies for Costing cca 59 I D E N T I F Y I N G A DA PTAT I O N G A P S: L I N K I N G adaptation and more challenging to finance CCA CO S T S O F M E A S U R E S TO CCA anticipatory and transformational adaptation. This EXPENDITURES AND FINANCING means public sources of finance will need to be scaled up, which is important for public investment Stakeholders recognize that filling the adaptation strategies and medium-term budget plans. gap will require a major scale-up of public, private, and blended adaptation finance, involving new Adaptation costing studies provide the initial actors, new models, and new financial instruments. information needed for all of this and can be further Global and European climate finance flows are now applied to adaptation investment planning and very large, but they are dominated by mitigation; the financing. Stress tests have been conducted on the flows to adaptation are small and mainly from public potential impacts of climate change on MS public sources.175 This means a large gap exists in Europe finances, including on indicators such as debt to GDP between the amount needed for adaptation and the levels.176 These tests have determined that climate current finance flowing. change may pose risks to fiscal (debt) sustainability in some countries, and further dialogue with ministries To fill it, a major scale-up is needed of public, of finance is important to managing them. Several private, and blended adaptation finance, involving countries are undertaking climate budget tagging new actors, new models, and new financial and looking at the possible effects of adaptation on instruments. Several challenges are posed, however, spending plans and the public finance. Adaptation by barriers and constraints to adaptation. These costing studies can contribute to such analysis and barriers include information gaps, market failures, encourage investment by demonstrating the benefits and lack of bankability, policy constraints, and of early adaptation investment and how it can reduce misaligned regulation, as well as broader social and fiscal risks. An opportunity also exists for private cultural aspects that influence risk aversion and investment in some areas (such as market sectors balancing trade-offs for decision making. Importantly, and regulated sectors), although it presents questions generating revenues can be more difficult for as to who pays for the adaptation and how the burden adaptation than for mitigation investments; relatedly, can be equitable. it is easier to finance no-regret and incremental Examples from Europe: Elements considered by countries in practice for costing CCA impacts Different countries have used many different types N AT I O N A L-L E V E L P LA N N I N G of CCA costing assessments at various levels (national, sectoral, and programmatic). These range In France, two recent national studies177 used an from systematic studies building on complex adaptive management (policy-first) approach to scientific assessments to more ad hoc or partial CCA costing that helped initiate a national debate assessments. Some examples are presented below. and prompt further studies. A first set of 18 budgetary measures was derived to be included in the next 175 Climate Policy Initiative. 2023. Global landscape of climate finance 2023. Link.; Frontier Economics. 2022. Barriers to financing adaptation action in the UK. Link. 176 The EC Fiscal Sustainability Report 2021 (DG ECFIN) included an extreme event stress test to assess the risks to public finances—a first step in policy readiness. The results led to the conclusion that climate change may pose risks to fiscal (debt) sustainability in some countries, although these were reported as remaining manageable under (low) global warming scenarios (European Commission. 2021. Fiscal sustainability report 2021. Link.). 177 Depoues et al. 2022. Overview of the Literature and Methodologies for Costing cca 60 National Financial Budget Strategy and serve as the The report also highlighted that this amount covered initial building blocks for preparing, enhancing, or only around 20 percent of the 60 risks and operationalizing existing CCA actions over the opportunities identified in the UK’s climate change following five years. France focused on no- and low- risk assessment. The analysis indicated, therefore, regret measures, costs of processes, and the plans that a plausible upper level of planned adaptation needed, as well as early technical options; together, costs for the UK, to tackle all risks this decade, would these analyses could provide a plausible lower bound be about £10 billion (€11.6 billion) per year. for CCA costs (an additional cumulative amount of financing for adaptation of at least €2.3 billion per In Austria and Germany, studies undertaken for year). These studies have to be seen in the context of decades, using first a science-first and later policy- an ongoing national debate on how to prepare early first as well as adaptive management approaches, for a 4°C world. Moreover, as a leader in green have supported advocacy for and prioritization of budgeting, France also based estimates of future CCA measures at the national and local levels. For climate spending under favorable and unfavorable both countries, the quality of these studies has been climate scenarios partly on estimated costs of CCA high, and they have produced a wealth of information. found in previous studies178 and analyzed the impacts In Germany (population around 83 million in 2021), of regular and tax expenditures on different climate the annual costs of CCA have been estimated at and environmental objectives.179 In addition, sectoral €140 billion–€142 billion182 and in Austria (popu­ assessments are currently underway, with initial lation around 9 million) €421 million–€573 million.183 focus on the building, transportation infrastructure, The studies have applied different methodologies to and agricultural sectors; these studies are drawing inform CCA at various levels and for various policy on national debates to weigh the potential benefits objectives (financial resilience policies, sectoral and costs of adaptation, as well as decide what are planning, informing NAPs, and so on). Moreover, the “acceptable residual impacts” after CCA.180 more recently, both countries reviewed their financial flows to enhance the efficiency of green spending.184 In the United Kingdom, a 2023 study181 assessed The results in Germany helped convince the national the costs of major adaptation measures for the government that adaptation could reduce projected decade 2020 – 2030 and presented both planned climate damage considerably at the national—not and anticipatory actions. The largest costs of CCA only the local—level, with synergies between measures were associated with addressing coastal mitigation and adaptation. In Austria, the results and river flooding, overheating, and risks to water suggested that 11.4 percent of public expenditures supply, the infrastructure, and the natural and 11.5 percent of revenues were related to the environment. The cumulative costs of addressing country’s climate, energy, and environmental these major risks were estimated at £4.5 billion objectives, which was in line with the country’s (€5.3 billion) per year for this decade (0.2 percent of National Development Strategy. An extensive process the EU-27 GDP). This represented the minimum level to identify Austria’s expenditures on CCA showed of action needed to tackle current risks and start that implementation of the National Adaptation planning for the future and was equivalent to an Strategy did not include additional adaptation budget annual adaptation cost of €35 billion per year for the but, rather, reshuffled current expenditures, and that EU-27 this decade when extrapolated to Europe. most entities, particularly at the local level, had only 178 Alexandre, S., et al. 2019. Link. 179 Eichberger, S., et al. 2023. Budgeting for Climate Action: Lessons from Austria, France, and the European Union. Link. 180 I4CE. 2023. Economic implications of adaptation pathways (upcoming). Link. 181 Watkiss. 2023. 182 Tröltzsch, J., et al. 2012. Link.; IÖW. 2021. Link. 183 Knittel, N., et al. 2017. Link.; value adjusted to 2022 EUR and different from original report. 184 Government of Austria. 2022. Spending Review im Rahmen des Aufbau- und Resilienzplans - Modul 1 „Analyse der klima- und energiepolitischen Förder- und Anreizlandschaft“. Link. Overview of the Literature and Methodologies for Costing cca 61 limited knowledge of expenditures for adaptation in or €22.8 million, if a new subsidy for investments to absolute or percentage terms. This finding led to protect against natural disasters were included);187 follow-up nationally funded programs to determine the case study and results from new research for more specifically and prioritize CCA measures that Sweden are presented in Chapter 2. In Slovakia, the would support implementation.185 National Adaptation Strategy estimated that a total investment in adaptation of around €3 billion, In Croatia, the implementation costs of CCA covering budget for operation programs, was needed measures were assessed as a part of the country’s between 2014 and 2020.188 In Spain, the National National Adaptation Strategy to establish the Adaptation Plan estimated a total investment in financial mechanisms for adaptation.186 The adaptation at around €1.5 billion from 2021 to 2025. assessment suggested the total amount of investment This amount covers investment in eighteen sectors, needed between 2020 and 2040 for the with the largest expenditures in the water sector implementation of the measures proposed in the (€525.6 million), environment and biodiversity National Adaptation Strategy was about HRK 27 (around €320 million), coastal and marine billion (€3.6 billion). The cost estimate covered environment (€277.7 million), urban planning and measures in eleven sectors, with more than half of construction (€205.7 million), and transportation the estimated amount allocated to the implementation (€114.6 million). of “structural” measures, especially in such key sectors as agriculture, forestry, and water In Greece, two studies were undertaken to assess management and, to a lesser extent, in energy and the cost of adaptation from a long-term science tourism. Measures in the agricultural and forestry perspective. In 2016, the Greek National Adaptation sectors were considered “no-regret” options that Strategy189 suggested the cumulative cost of would generate positive impacts in combating climate adaptation until 2100 would be about €123 billion, change and whose implementation was already covering a variety of adaptation measures in seven planned. The assessment provided an overview of the key sectors, among them forests, agriculture and total amount of investment needed for adaptation, fishing, tourism, transportation, and buildings and while more precise costs of measures and activities, infrastructure. An earlier study by the Bank of as well as sources of funding, were to be assessed in Greece190 assessed the costs of adaptation and its the action plans and implementation documents of effects on the Greek economy under a high-intensity the National Adaptation Strategy. The case study and climate scenario, using the general equilibrium model results from new research for Croatia are presented GEM-E3 and benefit-cost analysis (BCA). The results in Chapter 2. showed estimated cumulative costs of adaptation for the period 2011–2100 of €28 billion based on a In Sweden, Slovakia, and Spain, national authorities 0 percent discount rate and €67 billion based on a conducted the costing of CCA measures, with a 2 percent rate. The study also showcased the high focus on near-term (five-year) budgetary planning. benefit of adaptation in terms of climate loss avoided, In 2007, Sweden’s Commission on Climate and finding that the €67 billion investment in adaptation Vulnerability suggested that about SEK 210 million could lead to a cost savings of €123 billion (at 2008 (€18.4 million) was needed for CCA investment from constant prices), compared to an inaction scenario. A 2007 to 2012 (this amount would be SEK 260 million, theme common to the two Greek assessments was 185 The government of Austria is establishing a system to track the implementation of and changes in actual expenditures for climate adaptation. This is supported by efforts to improve information collection systems at the local level and by a project funded by Austria National Bank to determine how expenditures will evolve over time; trade-offs; and synergies; and to improve evidence on adaptation measures and costs related to heat and flood risk mitigation. 186 Government of Croatia. 2020. Climate change adaptation strategy for the period up to 2040 with a view to 2070. Link. 187 Government of Sweden. 2007. Sweden facing climate change – threats and opportunities. Link. 188 Government of Slovakia. 2018. Climate Change Adaptation Strategy of the Slovak Republic. Link. 189 Government of Greece. 2016. National Strategy for Adaptation to Climate Change. Link. 190 Bank of Greece. 2011. The Environmental, Economic and Social Impacts of Climate Change in Greece. Link. Overview of the Literature and Methodologies for Costing cca 62 that they both considered climate impacts in the far transportation (€1.9 billion). Other sectors and topics future and reflected the significant amount of covered by the strategy included biodiversity and investment needed for adaptation, given the ecosystem services, health, population and air intensified risks and impacts of climate change over quality, cultural heritage, and insurance as a CCA the period assessed. instrument. The draft strategy and action plan were elaborated through the national project RO-ADAPT, In Bulgaria, initial high-level sectoral assessments based on the latest information available, which were substantially expanded to complement the made it possible to establish forecasts and scenarios country’s National CCA Strategy and Action Plan in terms of impacts of and adaptation to climate for 2019–30191 and its National DRM Plan of 2022192 change, as well as adaptation objectives for the and to serve as the basis for prioritizing and costing medium and long terms. These documents resulted their respective programs. While the CCA Action from a collaboration between the Ministry of Plan provided an estimate of the expected cost of Environment, Water, and Forests and a consortium each measure, these estimates were designed to led by the National Meteorological Administration. serve as general guidelines and predominantly The case study and results from new research for divided into broad budget cost categories (low: up to Romania are presented in Chapter 2. €1 million; medium: €1 million–€100 million; or high: above €100 million). Hence, these figures are not comparable with those produced by other S E CTO RA L-L E V E L P LA N N I N G assessments, such as in Austria, France, and Germany, whose CCA cost estimates were provided In Austria, Spain, and the Netherlands, assessments at the national scale in annual terms. The case study were undertaken to analyze the sectoral impact of and results from new research for Bulgaria are hazards and estimate the cost of adaptation in presented in Chapter 2. multiple sectors as additional public adaptation expenditure needed until 2050.196 In Austria and In Romania, an assessment was undertaken at the Spain, the assessments considered the effects of national level as part of the process of elaborating climate change on agriculture and forestry and the Romania's NAP and CCA Strategy and its Action impact of river floods, while in the Netherlands the Plan for 2023–30 to showcase the costs of selected impact of river and coastal floods was considered adaptation measures in 13 sectors.193 Preliminary across sectors. The results suggested estimated estimates of CCA costs presented in the draft strategy costs of adaptation for Austria, Spain, and the and corresponding action plan totaled €19 billion for Netherlands of, respectively, €0.24 billion, the thirteen sectors for the time period covered; for €0.33 billion, and €1.15 billion. Follow-up studies six key sectors,194 around €15 billion would need to based on these results were conducted to inform be allocated.195 Sectors with the largest estimated decision-making in adaptative sectoral planning and costs included water resources (€5.42 billion), provide associated cost estimates, including agriculture (€4.5 billion), forestry (€2.3 billion), and investment, maintenance, and operating costs. 191 Government of Bulgaria. 2019. National Climate Change Adaptation Strategy and Action Plan. Link. 192 Government of Bulgaria. 2019. National Disaster Risk Management Plan. Link. 193 For the purpose of this report, Romania's 'NAP' refers to the Action Plan of the draft National Strategy for Climate Change Adaptation, which has been published for public consultation on the Ministry of Environment, Water and Forests’ website in August 2023. At the time of completion of the present report, the draft Strategy and Action Plan are in the process of being approved, based on the revisions following the consultations. The numbers analyzed and presented in this report rely on the draft Strategy and Action Plan version from August 2023, which may eventually differ from the final version to be approved by the Government of Romania. Link. 2023. Extract from the draft National Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030 (draft as of August 2023). Link. Expected approval in April-May 2024. 194 Water resources, agriculture, forestry, localities/urban systems, energy, transport, tourism and industry. 195 Excluding the Transport section, for which data was not available. 196 Van der Wijst, K. et al. 2021. D4.3 Macroeconomic Assessment of Policy Effectiveness. Link.; Watkiss, P., and Preinfalk, E. 2022. “The Economics of Climate Adaptation in the EU: New Evidence from Recent Research.” Link. Overview of the Literature and Methodologies for Costing cca 63 In the United Kingdom, the sectoral impact of enhancing the climate resilience of railway networks peatland fires and cost effectiveness of potential to SEK 7.5 billion (€650 million) for drinking water CCA measures to address wildfire risk were adaptation. The assessment also suggested that the assessed.197 The study sought to provide evidence for opportunity for carrying out detailed cost calculations the Third National Adaptation Programme (NAP3) and cost-benefit analyses was limited. Meanwhile, and focused on wildfire risk for peatlands as carbon because of the spectrum of climate projections and stores (N5). Following a science-first approach, it first the lifetime and future development of adaptation examined the current and future economic costs of measures, the results have primarily been used to peatland fires, fire suppression and restoration costs, provide general guidelines and show possible as well as the costs of carbon emissions and air magnitudes of CCA costs. The case study and results pollution. The results suggested the estimated for Sweden are presented in Chapter 2. current cost of peatland wildfires at £34 million–£192 million (€40 million–€225 million) per year, while the costs in 2050 ranged from £100 million to £600 P RO G RA M M AT I C P LA N N I N G million (€117 million–€702 million) per year, with potential for exceeding £1 billion (€1.17 billion). To inform CCA strategies in the Netherlands, a Several wildfire management and adaptation options project-based assessment was undertaken of the were considered, such as peatland restoration, unit costs of adapting coastal defenses in low-lying wildfire response training programs and wildfire delta areas.199 Based on cost reports and benefit- management plans, as well as public awareness cost analysis of existing adaptation projects, the campaigns, with the costs and benefits of adaptation assessment identified and estimated the costs for assessed through BCA. For instance, with an different flood defense measures, such as coastal estimated cost ranging from £1.4 million–£6.7 and river dikes, storm surge barriers, dams, and sand million (€1.6 million–€7.8 million), the national dunes. The results of the assessment suggested the training program was identified as a no-regret option cost per meter of height for raising the sea dikes, for that would reduce wildfire risks while generating instance, ranged from €15.5 million to €22.4 million numerous private benefits. The approach was one per kilometer in urban areas and from €4.5 million to that could be replicated in other countries with fire- €12.4 million per kilometer in rural areas. As it was prone forest or peatland areas and was applied in based on actual project data, this assessment Sweden’s study to demonstrate analytical steps estimated higher all-in costs than earlier studies. It taken and data needs. demonstrated how programmatic assessments could be used to provide closer estimates of CCA costs, as In Sweden, an assessment undertaken by the they could better reflect real situations in areas where Swedish Commission on Climate and Vulnerability situations are commonly not ideal. examined the costs of climate change damage and of implementing climate action in different sectors, In Spain, a quantitative, scenario-based BCA was such as agriculture, water, forestry, transportation, undertaken for two heat wave adaptation measures and buildings and critical infrastructure.198 (a green roof and a heat-health warning system) as Depending on the sectoral needs and the various part of the BASE200 project funded by the EU.201 The types of hazards and adaptation measures assessed, measures pertained to a wide range of sectors, the CCA costs were found to vary greatly from, for including water, agriculture, health, biodiversity, and instance, SEK 20 million (€1.73 million) per year for the ecosystem, and the study assessed their costs 197 Watkiss, P. 2022. Analysis Phase: Wildfire Risk to Carbon Stores (Peatland) and Adaptation Response. 198 Government of Sweden. 2007. Link. 199 Jonkman et al. 2013. “Costs of Adapting Coastal Defences to Sea-Level Rise- New Estimates and Their Implications.” Link. 200 ”BASE” stands for ”Bottom-up climate Adaptation Strategies towards a sustainable Europe.” 201 Meyer, V., et al. 2015. BASE Report: Economic Evaluation of Adaptation Options. Link. Overview of the Literature and Methodologies for Costing cca 64 and benefits under different climate scenarios (RCP support decision-making in the enhancement of 4.5 and RCP 8.5) and socioeconomic scenarios. For climate resilience of residential buildings. the green roof, it estimated an initial cost ranging from €279 million to around €1.5 billion and a maintenance cost ranging from €98 million to around L E S S O N S L E A R N E D F RO M CO U N T RY €2 billion over the period 2020–2100. The estimated E XA M P L E S initial cost for the heat-health warning system ranged from €0.4 million to €21.3 million, with additional Since the process of CCA costing can take time and costs ranging from €7.1 million to €12 million. The money, the benefits and potential quality of the assessment showed that CCA estimation is highly results should be weighed against the investments sensitive to the choice of socio-climatic scenario and in resources and time. In some countries such as discount rate, so these aspects need to be carefully Austria, France, Germany, and Italy, research considered when undertaking assessments. programs have been implemented over the past five to ten years, or information has become available In the UK, the objective of a study published under from EU research programs (for example, COACCH the commission of the Committee on Climate and EconAdapt), which include modeling of granular Change was to identify potential low-regrets options climate change impacts and the costs and benefits of for climate change adaptation in the residential technical options for CCA. These have contributed buildings sector.202 The study assessed the costs and information for programs at the national level but may benefits of a variety of adaptation measures for sometimes have lacked information immediately residential buildings that reduce losses from three relevant for five-year financial planning; this is why, in types of climate events: water stress, floods, and Austria and France, specific research programs have overheating. Cost curves were developed for different been implemented (I4CE, PACINAS, and so on) to residential adaptation options to present their costs identify CCA costs from a budgeting perspective. In and benefits. In addition, worst- and best-case others, such as Bulgaria, lack of data and information climate scenarios were assessed through sensitivity has made more complex assessments infeasible but analysis. The study showed that the CCA costs could NAPs have been informed by program-based analysis vary greatly, depending on the types of measures and to estimate the costs of the activities. climate scenarios. The unit cost of a new-build water efficiency package, for instance, could range from In some cases, time and effort spent on studies over almost negligible to £6,274 (€7,232) per property, many years have brought numerous benefits. With with standards of 110 and 105 liters per person per regard to national-level planning, in Austria203 and day identified as low-regret options. As for benefits, Germany204, comprehensive studies on the cost of the analysis considered, in addition to enhanced CCA based on impact studies have taken around two climate resilience, the wider benefits of adaptation, decades and involved approximately 10 research including enhanced energy efficiency, reduced projects. These studies have provided valuable electricity and carbon costs, and impacts to human insights and played a crucial role, for example, in health avoided. Based on its findings, the study influencing the national government in Germany that presented a list of low-regret options with benefit- implementing adaptation measures can significantly cost ratios higher than 1, or in other words for every reduce climate damages at both national and local 1€ spent you would get more than 1€ back. This levels, with synergies between mitigation and presentation of prioritized measures was meant to adaptation. Studies helped to also identify several 202 Committee on Climate Change. 2019. Updating an assessment of the costs and benefits of low-regret climate change adaptation options in the residential buildings sector - Final Report. Link. 203 Tröltzsch, J., et al. 2012. Link.; Knittel, N., et al. 2017.Link; Government of Austria. 2022.Spending Review im Rahmen des Aufbau- und Resilienzplans - Modul 1 „Analyse der klima- und energiepolitischen Förder- und Anreizlandschaft“. Link.; Eichberger, S., et al. 2023. Budgeting for Climate Action: Lessons from Austria, France, and the European Union. Link. 204 IÖW. 2021. Link. Overview of the Literature and Methodologies for Costing cca 65 challenges in the implementation of adaptation in the United Kingdom totaled an estimated plans, including a limited knowledge of adaptation €11.6 billion per year.208 Extrapolating the results to expenditures and difficulty leveraging additional the European level could provide209 a plausible range budget instead of reallocating existing resources, of €15 billion–€78 billion per year for the EU-27. particularly at the local level. Follow-up nationally funded programs helped to bridge these information These studies are only indicative, as costs of gaps to determine more specifically CCA adaptation will vary greatly by country and thus expenditures and prioritize CCA measures to need to be assessed carefully according to the support implementation.205 country’s vulnerability and climate risks. Meanwhile, in the longer term (for 2050 and later), existing The studies considered CCA costs for a range of science-first studies (albeit limited in number) have policy horizons. The study in France206 that estimated provided varied adaptation cost estimates; examples adaptation costs at €2.3 billion per year focused on of the range in the literature include one estimate of identifying and costing no-regret measures that could US$32 billion–US$56 billion (€27 billion–€47 billion) be implemented immediately with minimal additional annually in a study from 2005210 and another study budget. The authors advised further in-depth sectoral from 2009 of US$155 billion–US$509 billion (€158 studies based on national debates to help weigh the billion—€518 billion) annually from 2025 to 2185.211 potential benefits and costs and decide on acceptable Because many of these costs would arise in later levels of residual climate impacts. This was different decades, they may indicate there is higher adaptation from the studies in Austria and Germany that— costs in the future and thus imply a need for rapid broadly speaking—considered first the ideal levels of scale-up of expenditure. CCA costs to minimize potential climate change impacts in a way that would make economic sense. The abovementioned studies have informed policy These studies started with longer horizons (to the dialogue and planning for climate change adaptation. 2050s), with follow-up studies then considering They have contributed to the mainstreaming of CCA measures that could be implemented in the short across line ministries’ plans. Now, more complex term, also based on consultations with stakeholders assessments have to be undertaken to assess the across ministries and from academia. effectiveness of measures (for instance, various types of investments and how they should be timed to Estimates for CCA costs differed greatly, depending enhance CCA and resilience). The costing of on the methodologies used and adaptation measures adaptation for national policy requires multiple covered. The national assessment for Austria, for evidence lines and studies and it develops over time instance, revealed that the costs of CCA differed even as more evidence emerges. The demand for this type for the same sector, depending on the methodology of information is likely to increase significantly as the used (€421 million per year based on a bottom-up EU and its Member States increase adaptation approach and €573 million per year based on a top- investments in multiannual expenditure programs down approach). The French I4CE study presented and as the finance needs for adaptation rise. an adaptation cost of only €2.3 billion per year,207 while the costs for more comprehensive adaptation 205 The government of Austria is establishing a system to track the implementation of and changes in actual expenditures for climate adaptation. This is supported by efforts to improve information collection systems at the local level and by a project funded by Austria National Bank to determine how expenditures will evolve over time; trade-offs; and synergies; and to improve evidence on adaptation measures and costs related to heat and flood risk mitigation. In addition, climate adaptation is supported at local level through the nation-wide program KLAR! - Climate Change Adaptation Model Regions for Austria (Government of Austria. 2024. Climate Change Adaptation Model Regions for Austria. Klima- und Energiefonds. Link.) 206 Depoues, V. et al. 2022. 207 Depoues, V. et al. 2022. 208 Watkiss, P. 2023. Link. 209 Knittel, N. et al. 2017. 210 Jeuken, A. et al. 2016. 211 EU. 2017. Climate mainstreaming in the EU budget: Preparing for the next MFF - final report Link. based on De Bruin et al. 2009. Overview of the Literature and Methodologies for Costing cca 66 Although no current studies on transformational mentioned in limited studies. A recent study214 in adaptation exist, initial efforts have been made to Germany, for instance, assessed the implementation bring about more systemic changes. In France, and transaction costs of CCA measures incurred by policy-makers have started a process to prepare for a the state, companies, and households, but it did not 4°C world, and in May 2023 they initiated a survey in clearly show how the cost was split between the the country.212 The Environment Ministry aims to public and private sectors. In Portugal, where Forest define a reference trajectory for CCA for the Intervention Zones (Zona de Intervenção Florestal, pessimistic 4°C scenario, which would serve as a or ZIF) are considered promising as a forest basis for defining and strengthening policies. Early management plan for CCA and wildfire risk reduction, national debates and research have provided inputs implementation of the plan faces a significant to update the country’s next National Climate Change challenge in terms of how to split the CCA costs Adaptation Plan (Plan National d'Adaptation au between the government and private landowners, as Changement Climatique). Although only a starting adaptation measures such as the removal of trees for point for large-scale systemic changes, this provides fuel breaks or less flammable vegetation require a an example of raising awareness of higher-end trade-off in the form of future losses in harvest outcomes, starting societal discussions, and setting incomes for private landowners, without financial initial pathways. compensation from the government.215 The public sector must, therefore, promote further private CCA Few studies have been conducted or methodologies investments, which can be done by creating enabling applied to estimate the share of CCA costs among conditions, supporting the de-risking of private various economic actors. Few studies have outlined investment, incentivizing risk transfer mechanisms clearly and in detail how the various types of costs of (insurance), or developing public-private partnerships. CCA measures will be divided among various levels of Private sector CCA investments can also be incentivized government and what transaction costs may be through regulatory mechanisms, such as obligations involved for coordination and for further budget for contingency plans, abidance by building codes, or allocations, if needed, from the national to local action requirements in case of an EWS trigger, and levels. Although the rapid increase in private risk assessment guidelines for consistency, among investment in adaptation and climate resilience213 others. More research is needed to provide more makes consideration of the division of the cost burden guidance and details on effective financial instruments between the public and private sectors crucial when for climate adaptation, including insurance, to tackle implementing CCA measures, this division is only various climate hazards.216 212 Government of France. 2024. "France adapts" ("La France s'adapte"). Link. Garric, A. 2023. “Climate Change: France Launches Public Consultation to Prepare for a 4°C Rise.” Link. 213 Tall, A. et al. 2021. Enabling Private Investment in Climate Adaptation and Resilience: Current Status, Barriers to Investment and Blueprint for Action. Link. 214 GoG Umweltbundesamt. 2020. 215 Beighley, M., and Hyde, A. C. 2018. Portugal Wildfire Management in a New Era – Assessing Fire Risks, Resources and Reforms. Link. 216 See among others: WB and EC. Forthcoming. EDPP2 - Component 3 - Bringing National and Regional Finance to Scale. Overview of the Literature and Methodologies for Costing cca 67 CCA costs at European level: Status quo and further evidence required C U R R E N T E V I D E N C E AT E U L E V E L O N CCA level to inform strategies and policies.222 In general, CO S T S RA N G E S most national and sector studies focus on impact assessments and the economic costs of climate No recent, comprehensive estimates of CCA costs change rather than the costs (and benefits) of yet exist at the EU level.217 The results and related reducing these potential impacts and minimizing policy recommendations from EU-wide assessments residual impacts—that is, climate adaptation costs of current and future climate risks and impacts that (see Table 4 in Annex 1). are currently underway (EUCRA, TRACE) will only be finalized in 2024. The EC has started addressing the This reflects the much greater difficulty of estimating gap between EU-wide assessment and that of the costs and benefits of CCA than of mitigation. individual countries through research, knowledge Mitigation addresses a common global burden (tons sharing, and capacity building.218 The PESETA IV of CO2), and mitigation measures can be assessed studies, for instance, have assessed the impacts of and compared directly across sectors and locations, climate change and climate-induced hazards on using cost-effectiveness and marginal-abatement different sectors based on different climate and cost curves. In contrast, adaptation is a response to socioeconomic projections and provided estimates of multiple site- and context-specific climate risks. the costs and benefits of potential adaptation These risks are dynamic; they change over time and measures for some hazards, such as coastal are subject to a spectrum of projected climate flooding.219 Costing assessments are challenging, impacts, both as a result of scenario differences (for however, and information and knowledge gaps example, between 2˚C and 4˚C pathways) and of remain. Among others, near-term EU-wide differences between climate model outputs. assessments of CCA investment needs are lacking Adaptation is also normally an extension of existing and assessments also have incomplete coverage of activities. It pursues multiple goals and tends to be sectors. There is also a lack of studies estimating CCA mainstreamed into existing policies, programs, and needs related to the disaster risk management sector, plans rather than implemented as a new top-down including the climate-proofing of critical objective and policy.223 Adaptation assessments infrastructure. Such assessments would also be 220 need, therefore, to be grounded in country and sector important in achieving the objectives of the Critical contexts. In addition, there is insufficient information Entities Critical Entities Directive (2022/2557), and on the effectiveness of adaptation options in reducing where relevant, the amended Network and risks, and adaptation involves a broader mixture of Information Systems (NIS2) Directive (2022/2555).221 technical and nontechnical options. This means analysis to support adaptation decisions typically Countries are at different levels of adaptation uses extended BCA or methods that merge planning and implementation, and only a few have quantitative and qualitative rather than cost- developed cost estimates for CCA at the national effectiveness approaches, and adaptation is usually 217 Detailed recent assessments exist on CCM but not for CCA. The most recent source is a 2017 Commission study on climate mainstreaming in the Multiannual Financial Framework (MFF), which refers to two previous incomplete and outdated studies that estimated CCA needs at €30 billion–€500 billion. The most recent PESETA IV and COACCH reports also give a broad idea of needs and net benefits but not of granular financial/ economic costs (Forster, D. et al. 2017. Climate Mainstreaming in the EU Budget: Preparing for the Next MFF: Final Report. Link.; EC. 2021. JRC PESETA IV. Link.; COACCH. 2021. The Economic Cost of Climate Change in Europe: Report on Policy Results. Link.). 218 EEA. 2022. Towards ‘Just Resilience’: Leaving No One Behind When Adapting to Climate Change. Link; EEA 2020b. 219 Feyen et al. 2020. 220 Hallegatte, S. et al. 2019. Lifelines: The Resilient Infrastructure Opportunity. Link. 221 EU. 2022. Directive 2022/2557/EU. Link.; EU. 2022a. Directive 2022/2555/EU. Link. 222 EEA. 2023a. 223 Watkiss et al. 2014a. Overview of the Literature and Methodologies for Costing cca 68 framed as a “process” of iterative adaptation over extreme temperature and weather events. For time.224 Finally, limited access to information on national planning, most of the assessments consider public budgets and adaptation expenditures at the multiple climate hazards, while those for sectoral and national and subnational levels complicates the task programmatic planning generally focus on adaptation and leads to lengthy processes with substantial needs costs and investment needs for one specific hazard. for consultation.225 With respect to sectoral coverage, all of the national assessments reviewed cover multiple economic A review of the literature reveals limited coverage of sectors, from three sectors in Austria226 (top-down near-term CCA costs and indicates incomplete approach) to thirteen each in Germany227 and coverage of climate hazards and sectors. Of the Romania.228 Some consider CCA costs for all sectors more than 120 literature reports reviewed for this or the economy overall. As for sectoral planning, most study, only about 30 (covering 17 European countries) assessments focus on adaptation in the agricultural, have CCA cost estimates (see Figure 14 and Figure forestry, land, and DRM sectors, while common 15). The cost assessments can be categorized into sectors for programmatic planning include three types—national planning, sectoral planning, agriculture, water, land management, and and programmatic planning (also referred to as transportation. These tend to be more affected by investment portfolio planning), which are described climate change and climate-induced hazards and in detail in Chapter 4—and they cover a range of thus are more often covered in the assessments. hazards, such as floods, wildfires, droughts, and Figure 14. Total studies reviewed by type of assessment 12% National assessment 6% Sectoral assessment 11% Programmatic assessment 64% Global/EU/regional assessment 7% No CCA cost estimates Source: World Bank. 224 Dimitríjevics, A., B. Döhring, J. Varga, and J. in ’t Veld. 2021. “Economic Impacts of Climate Change and Mitigation.” Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), EC 20 (1): 23–38. Link. 225 EEA 2023a. 226 Knittel et al. 2017. 227 Tröltzsch et al. 2012 and IÖW 2021. 228 Government of Romania. 2023. Draft National Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030 (draft as of August 2023). Link. Expected approval in April-May 2024. Overview of the Literature and Methodologies for Costing cca 69 Figure 15. National-level studies reviewed by type of assessment and hazard Heatwave 1 Drought 1 Wildfire 1 Type of hazard Extreme temperature 2 & weather events Two hazards 2 1 Three hazards 1 2 Flood 1 6 All hazards 14 3 0 5 10 15 20 Number of studies Type of Assessment: National Planning Sectoral Planning Programmatic Planning Source: World Bank. See Table 5 in Annex 1. Existing estimates of CCA costs vary, and these existing analytics can still help highlight certain key ranges should be considered with caution, as the points and provide insights for future analysis. studies are not directly comparable. Some of the estimates, for example, represent short-term costs of adaptation for this decade, while others provide N AT I O N A L-L E V E L E S T I M AT E S values up to the year 2100. When put into context, however, results of these studies can provide the At the national level, assessments of CCA costs potential range of investment needs for different have been carried out in many European countries; adaptation measures, especially if the adaptation most are near-term policy analyses of selected measures in the studies have the same imple­ adaptation measures to inform national policy or mentation period (see Table 5 and Table 6 in Annex 1 budgetary decisions. A common theme for these for more details). Preliminary costs of CCA options for studies is that they cover a wide range of sectors. this decade in France,229 for instance, are estimated Most cover five to ten sectors, while some cover at €2.3 billion per year for no-regret adaptation,230 thirteen or more sectors in the economy. The results compared to an estimated €421 million–€573 million reveal that, depending on the sectors and measures per year in Austria,231 €2.7 billion per year in considered, the annual cost of adaptation could vary Romania,232 and €3.96 million per year in Estonia hugely across countries, ranging from €3.96 million also for this decade.233 It should be noted that the to €11.6 billion.235 Figure 16 and Figure 17 present comparability of the cost estimates is also affected by the annual CCA costs and costs per person, studies’ respective focus on the different types of respectively, determined by short-term policy-first adaptation options.234 Nevertheless, results from national assessments. 229 Estimates are adjusted to 2022 euros and in annual terms and thus may differ from original values in the literature, which can be found in Annex 1. 230 Depoues et al. 2022. 231 Knittel et al. 2017. 232 Government of Romania. 2023. Draft National Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030 (draft as of August 2023). Link. Expected approval in April-May 2024. 233 Republic of Estonia, Ministry of Environment. 2017. Climate Change Adaptation Development Plan until 2030. Link. 234 The estimate for France, for example, considers only no-regret options, while that for Germany considers all types of adaptation measures. 235 Estimates are adjusted to 2022 euros and in annual terms and thus may differ from original values in the literature, which can be found in Annex 1. Overview of the Literature and Methodologies for Costing cca 70 Figure 16. Annual CCA costs from short-term policy-first national assessments Country 12000 11600 10000 8000 Millionen in Eur 6000 5300 4000 2714 2300 2000 203,08 349,76 421 573 599 3,96 0 Estonia Croatia Spain Austria Austria Slovakia France Romania UK UK (bottom-up (top-down (minimum (full action) approach) approach) action) Source: World Bank. See Annex 1, Table 5 . Note: CCA cost estimates differ from original unit values in Table 4 in Annex 1. Values in this figure are in 2022 euros. Bulgaria (Republic of Bulgaria 2019)236 is not included in this figure, as the study provides CCA cost estimates per adaptation option and is thus not comparable with the other assessments, which estimate CCA costs at the national level in annual terms. Figure 17. Annual CCA costs per capita from short-term policy-first national assessments Country 200.00 173,78 180.00 160.00 142,54 140.00 120.00 110,22 100.00 Eur 79,07 80.00 46,89 52,58 63,82 60.00 33,89 40.00 6,54 20.00 2,97 0.00 Estonia Spain France Austria Croatia Austria UK Slovakia Romania UK (bottom-up (top-down (minimum (full action) approach) approach) action) Source: World Bank. See Table 5 in Annex 1. Note: CCA cost estimates differ from original unit values in Table 4 in Annex 1. Values are in 2022 euros and calculated in per capita terms by dividing each cost estimate by the country’s population (data obtained from Eurostat Database).237 Bulgaria (Republic of Bulgaria 2019)238 is not included in this figure, as the study provides CCA cost estimates per adaptation option and is thus not comparable with the other assessments, which estimate national CCA costs at the national level in annual terms. 236 Republic of Bulgaria 2019. 237 EU, Eurostat Database. Link. 238 Republic of Bulgaria. 2019. Overview of the Literature and Methodologies for Costing cca 71 E XT RA PO LAT I N G F RO M CO U N T RY E V I D E N C E 0.4 percent of the EU-27 GDP (Figure 18). These TO T H E E U RO P E A N L E V E L values are based on three recent country studies (for Austria, France, and Romania) that have focused on Results from selected short-term policy-first adaptation costs for this decade. The three case assessments can be extrapolated to the European studies took different approaches, which were level. The ideal theoretical approach for extrapolation summarized in the section “Examples from Europe,” would be to replicate a similar type of study, with above. The French study estimated the cost of similar results per capita as those produced for adaptation to be at least €2.3 billion per year which different country contexts, but at European level. The focused on immediate no- and low-regret measures theoretical ideal approach is not possible given lack and included the costs of the processes and plans of information. Also, costs of CCA will vary from needed, as well as early technical options. In Austria, country to country according to vulnerability, and the a bottom-up assessment estimated the costs of extrapolation of values based on certain countries implementing 132 adaptation measures identified in may therefore underestimate the costs of adaptation 14 key areas of the Austrian National Adaptation in other countries more prone to climate risks. Despite strategy; they totaled €421 million per year.239 the limitations, the analysis has aimed to showcase Meanwhile, in Romania, a bottom-up assessment of plausible benchmarks of the likely adaptation costs measures included in the Action Plan for the for this decade for the EU-27 that can serve as implementation of the National Adaptation Strategy indicative estimates. estimated that approximately € 2.7 billion per year would be expected to be allocated to CCA measures Accordingly, adaptation cost estimates for the from 2023 to 2030.240 Therefore, the studies EU-27, could range from €15 billion to €64 billion respectively provide plausible lower, central/medium, per year. This includes a “central” estimate of €21 and upper bounds of adaptation costs. These studies billion, extrapolated on a per capita basis based on a can be compared to a UK study, which indicated a study for Austria that yielded costs of adaptation in plausible upper level of planned adaptation costs to the median range of those found across existing tackle all risks this decade of about £10 billion studies for Europe. This equates to between 0.1 and (€11.6 billion) per year. 239 Knittel et al. 2017. 240 Government of Romania. 2023. Draft National Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030 (draft as of August 2023). Link. Expected approval in April-May 2024. Overview of the Literature and Methodologies for Costing cca 72 Figure 18. Illustrative lower to upper bounds of annual CCA costs for the EU-27 until 2030 Lower bound indicative EU wide estimate Central bound indicative EU wide estimate Upper bound indicative EU wide estimate 15 Billion/year 21Billion/year 64 Billion/year Italy, 2.0 Spain, 1.6 Italy, 4.1 Spain, 3.3 Germany, 2.8 Germany, 5.8 Germany, 11.9 Italy, 8.4 France, 2.3 France, 4.7 France, 9.7 Spain, 6.8 Extrapolation to EU27 with Extrapolation to EU27 with Extrapolation to EU27 with French national CCA cost Austrian national CCA cost Romanian national CCA cost estimate as a basis and estimate as a basis and estimate as a basis and per capita adjustment per capita adjustment per capita adjustment per country per country per country French national CCA cost estimate Austrian national CCA cost estimate Romanian national CCA cost estimate (Depoues et al. 2022) (Knittel et al. 2017) (NAP 2023 – draft being approved) Source: Based on Depoues et al. 2022; Knittel et al. 2017; and Government of Romania 2023. Note: EU-wide estimates are extrapolated from single-country estimates. The left panel of the figure presents a lower-bound estimate of annual CCA costs for the EU-27 (for no-regret adaptation only) for this decade, extrapolated on a per capita basis from the French study. The middle panel presents a central estimate of CCA costs per year for the EU-27 for this decade, extrapolated on a per capita basis from the Austrian PACINAS study. The right panel presents an upper-bound estimate of CCA costs per year for the EU-27 (for no-regret adaptation only) for this decade, extrapolated on a per capita basis from the draft Romanian National Climate, Change Adaptation Strategy and Action Plan dated August 2023.241 These values do not take account of vulnerability or risks in scaling up from the national level and can only be considered indicative. Another challenge to the comparability of results is in adaptation that could occur in the light of future the use by several studies of a long-term science climate risks and impacts. The estimates vary greatly perspective to assess the cost of adaptation at the across studies, as they depend heavily on the choice national or EU level. Such assessments consider of methodological approaches and key assumptions. climate impacts in the far future (2100 and beyond) Table 2 presents examples of CCA cost estimates and reflect the significant needs for annual investment from the long-term science studies reviewed. 241 Romania’s draft National Strategy for Climate Change Adaptation and its Action Plan have been published for public consultation on the Ministry of Environment, Water and Forests’ website in August 2023, as part of the official approval process. At the time of completion of the present report, the draft Strategy and Action Plan are in the process of being approved, based on the revisions following the consultations. Therefore, the numbers analyzed and presented in this report rely on the draft Strategy and Action Plan version from August 2023, which may eventually differ from the final version to be approved by the Government of Romania. Government of Romania. 2023. Draft Decision on the approval of the National Strategy on Adaptation to Climate Change for the period 2023-2030. Link. Overview of the Literature and Methodologies for Costing cca 73 Table 2. Annual CCA cost estimates from selected long-term science first assessments COUNTRY REFERENCE ANNUAL CCA COST EU-27 Jeuken et al. 2016 €27–47 billion EU 2017 based on De Bruin, Dellink, €158–518 billion from 2025 to 2185 and Agrawala 2009 Germany Tröltzsch et al. 2012 €140–142 billion until 2100 Greece Bank of Greece 2011 €310–750 million until 2100 Government of Greece 2016 €12.3 billion until 2100 Source: References included above; more information on studies included in Table 5 and Table 6 in Annex 1. S E CTO RA L-L E V E L E S T I M AT E S The results of these assessments suggest CCA costs vary greatly, depending on the sector covered, the For sectoral and programmatic planning (also project scope, and the types of adaptation options. referred to as investment portfolio planning), Adaptation measures for river or coastal floods, for assessments generally focus on the impact of one example, generally have high CCA costs, especially specific hazard on sectors or assets and estimate for physical protective infrastructure. For green the costs of the corresponding adaptation measures. measures, the costs tend to be much lower (see Sectoral assessments are usually intended to help Table 3 for examples of estimates from flood line ministries implement policies and investment assessments reviewed). Other aspects of adaptation, plans or allocate national budget lines to their sectors, however, such as the cost-effectiveness of the while the objective of programmatic assessments is measures, should also be considered when to prioritize measures and investments within CCA conducting programmatic assessments. For programs or track program costs.242 These two types adaptation in the agricultural and health sectors, the of assessments cover many common sectors, such as costs tend to be modest, while those in the agriculture, water, urban and land management, transportation sector vary greatly depending on the transportation, and DRM. For certain sectors, such as project scale, ranging from €519 million for a railway biodiversity and ecosystem services, studies network electrification project in Latvia243 to €2 billion assessing the costs of potential adaptation measures for upgrading sections of a pan-European railway in are still limited. Romania.244 The review of existing assessments here presents the possible range of CCA costs for different sectors, although it should be noted that the estimates are not fully comparable because of the diverse scope and scales of the assessments. 242 This study focused mainly on major national and sectoral assessments most relevant to the analysis. A review of all sectoral assessments, flood risk management plans, national adaptation plans, and other hazard plans of all EU Member States (most of them usually only in local languages) is beyond the scope of this project. 243 EC. 2018. Climate Change Adaptation of Major Infrastructure Projects. Link. 244 EC. 2018. Overview of the Literature and Methodologies for Costing cca 74 Table 3. CCA Cost Estimates from selected assessments for floods COUNTRY REFERENCE CCA COST Spain Scussolini et al. 2013 €210 million for grey measures and €0.03–10 million for soft measures Czech Republic Scussolini et al. 2013 €0.21 million to (mainly) €44.4 million, depending on the adaptation options Climate-ADAPT 2016 €145.9 million for grey measures Denmark EEA 2023a €217 million for hybrid adaptation measures (green and grey infrastructure) Poland Climate-ADAPT 2018 €217 million for hybrid adaptation measures (green and grey infrastructure) Source: World Bank. See Table 5 in Annex 1. Chapter summary: Toward scaling up and improving CCA cost assessments S U M M A RY O F A P P ROAC H E S A N D M E T H O D S adaptation pathways, analysis should begin by defining well the adaptation problem and adaptation The development of adaptation pathways for objectives, rather than by focusing on climate models. different levels of decision-making can set a broad For national policy, the focus should be more on strategic direction and can be supported by various understanding current and future adaptation costs tools, methods, and information. The framework for and looking at the use of economics to improve policy adaptation pathways will vary with the policy question, implementation. For project investments, it should but a common principle is that the process starts with emphasize adaptation objectives and key current risks and looks at future pathways, considering performance indicators (KPIs) and the consideration the diversity of projected scenarios for climate of tools such as DMUU. impacts, and encourages adaptive management and iterative learning. Climate risk analytics can then be A review of the literature and of CCA costing across used to provide information on future climate and in European countries provides many good examples the application of such approaches as “decision- and an overview of the costs found in different making under uncertainty” (DMUU). Evidence on contexts. The range of the costs found can be costs and benefits of CCA measures can help inform explained by differences in framing objectives, these pathways, but they should be supplemented definitions of adaptation, underlying assumptions, with considerations of the urgency of decisions and and methods. Presently, a shift is underway in the path dependency—that is, the effect of decisions or approach to CCA costing, and countries have already events on subsequent decisions and events. made adjustments in their adaptation studies. Policy- oriented studies focus more on soft adaptation Following broad principles, several approaches can interventions rather than hard infrastructure be used across country contexts, sectors, and investments alone, as the former tend to cost less climate hazards. This chapter showed the flow of and be easier to adjust as information and data decisions needed to cost CCA measures according to become available (as, for example, in Bulgaria and different needs and objectives and the resources and Romania). They also are beginning to consider the information available. There is no single blueprint or policy levers and enablers that are needed to deliver approach for costing CCA, and the appropriate adaptation in practice (capacity, policy or standards, method depends on the specific objectives and the market-based instruments, and so on). For countries levels and types of assessment. Broadly, with such as Austria, France, and Germany that are more Overview of the Literature and Methodologies for Costing cca 75 advanced in terms of assessment, the reconciliation literature and evidence base that could truly support of findings of CCA costs in assessments and the cross-learning. consideration of governance and budgeting at the sectoral and local levels have been important. This chapter could only touch upon how the results of cost studies should be updated over time and on important elements of planning and implementation, R E S E A RC H G A P S A N D O P PO RT U N I T I E S F O R such as adaptation finance. When undertaking and F U RT H E R S T U D I E S updating a CCA cost assessment, it is important to identify the informational sources that explain the The existing literature on CCA costs is unevenly spectrum of projected climate impacts and the distributed across sectors, hazards, and types of methodological assumptions that are crucial to adaptation measures. Studies are often limited to a decision-making. Well-founded cost assessment also few sectors (such as agriculture and water) and requires an understanding of the extent to which hazards (such as floods and extreme heat), but, even plausible alternative assumptions or manifestations for those, measures are rarely comprehensively of uncertain variables can change the conclusions costed.245 For other vulnerable sectors, such as that are reached and assist policy-makers in making biodiversity and ecological services, or on questions effective CCA investments. Moreover, improving such as how to adapt effectively to heat impacts on quantitative estimates of social, cultural, and labor productivity and at urban scales, evidence on environmental co-benefits of adaptation is important the cost of adaptation is still limited. Very few studies for continued improvement of the evidence needed also exist that account for the compounding and to shape effective packages of adaptation measures, cascading effects of climate change or consider the including, for example, green-grey and soft and hard cross-cutting themes or cross-sectoral dialogue on measures. CCA implementation, including how to prepare for and prevent wildfires and adapt forestry sectors. Finally, the key issue of who should bear the Moreover, existing cost assessments generally investment costs for CCA and investments has only concentrate more on “hard” structural adaptation been touched upon in this report, but it will be measures than on “soft” behavioral and policy critical for future adaptation. To date, adaptation measures, as their costs are easier to quantify.246 For has been largely undertaken by the public sector; flood risk prevention and adaptation, for instance, but, given the adaptation finance gap, the private more literature is available on assessing the costs of sector and households will clearly need to contribute. structural grey measures than nature-based solutions or capacity building. This imbalance may lead to biased, overestimated CCA costs and a neglect of soft R E CO M M E N DAT I O N S G O I N G F O RWA R D measures that could yield high returns with relatively low implementation costs. At the same time, the Given increasing awareness of the urgency to invest impact of other hazards, such as heat and wildfires, in certain CCA measures in Europe and the projected on critical infrastructure and how this should be scale-up in adaptation costs, greater emphasis on considered in building codes and retrofitting is costing assessments is a priority. A review of the seldom addressed. This report has aimed to fill in literature has shown that the evidence base on CCA some of these gaps, particularly through case studies costing in Europe is still limited and has on certain “use cases” (Chapter 2), but many more disproportionately comprised science-first, top- studies are needed to ensure a comprehensive down studies. NAPs provide a foundation for more 245 OECD. 2008. 246 OECD. 2008. Overview of the Literature and Methodologies for Costing cca 76 detailed sectoral studies, incorporating pathway will have to increase (or more of other budget lines thinking and moving to investment planning until the will have to be reallocated to it), and countries will 2030s, and a gradual scaling-up over time based on need to develop costing analysis as the rising climate risk information and scenario analytics. expenditure becomes a bigger issue for the public Acknowledging adaptation as an ongoing process finances. Investing in studies will generate fiscal means moving beyond lists of technical options and benefits by providing more and better analysis of how employing a portfolio approach, blending technical to prioritize adaptation and the trade-offs involved. and nontechnical solutions, and creating the enabling Much can be learned from the Austrian and German conditions for adaptation at the sector or national examples in terms of developing methods and advice level. To set the response to short- and long-term that enable Member States to fast-track costing challenges, this process must also be iterative and assessments and build up the community of practice dynamic. Countries have to adapt to both climate on these issues through, for example, ministries of stressors and shocks and “connect the dots” between finance, as well as climate focal points. disaster risk management and climate adaptation programs. In practice, this means breaking down the Moving ahead, countries need to start shifting away silos and encouraging cross-sectoral collaboration to from studies to inform incremental adaptation to create synergies and streamline efforts. ones that will enable transformational adaptation. More strategic analysis of climate risks and climate Across the EU, CCA costing processes have helped programming needs to be encouraged at the country to raise awareness, initiate national dialogue, and thematic levels and, as highlighted in the EU support decisions, and improve systems for Adaptation Mission, aligned with the IPCC, to deliver monitoring and tracking progress on CCA. As most more transformative and transformational adaptation. of the next two decades of climate change are already This includes delivery at scale and doing different locked in, adaptation will need to be scaled up, things as soft or hard limits to adaptation emerge. irrespective of progress toward the Paris Agreement This remains a major gap in adaptation costing that is goals. This implies that expenditure on adaptation likely to be important going forward. Overview of the Literature and Methodologies for Costing cca 77 2. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned This chapter summarizes key lessons learned based from practical applications. The chapter also on three “use cases”: national planning, sectoral summarizes the methodologies and approaches planning, and programmatic (also referred to as used in other countries, across Europe and beyond, investment portfolio) planning. In addition to the and discusses the feasibility of comparing, scaling review of existing examples described in Chapter 1, up, and replicating analytics for various country in-depth use case analytics were undertaken for contexts. Finally, the timing and sequencing of CCA Bulgaria, Croatia, Romania, Sweden, and the fictional investments is discussed. Aurelia to illustrate CCA costing and derive lessons K E Y TA K E AWAY S • National Adaptation Plans can provide a practical starting point for further estimation of CCA needs. Generally, NAPs put forth an extensive list of adaptation measures with actions that are feasible with current or slightly higher national budgets (often no-regret or low-regret measures), along with actions requiring more funding. Where NAPs can provide a basis for more detailed studies that consider updated climate risks, extreme scenarios, cascading or multi-hazard impacts, and cross-sectoral synergies, CCA studies provide a basis for more specific costing of CCA measures within broader programs or investment portfolios. This includes the identification of synergies and potential trade-offs and the feasibility of measures with current or increased budgets, thereby informing prioritization among measures and over time. For Bulgaria, the average costs of adaptation for a subset of sectors and hazards were estimated at €7.01 billion (undiscounted) for a five-year period, while Romania’s soon-to-be-approved National Adaptation Plan includes measures whose costs to 2030 amount to €19 billion in total and around €15 billion for six key sectors. • Measures considered in a particular adaptation portfolio can target key performance indicators relevant to that thematic area. As outlined in the Bulgaria case study, such portfolios could, for example, encompass investments related to heat and health, heat and comfort and productivity, wildfire and emergency management, and wildfire and forestry. Structuring CCA measures in portfolios also results in more holistic and outcome-oriented cost estimation. The breadth of the measures within a given portfolio often calls for appropriate budget considerations and multi-agency coordination structures. 78 • Within a portfolio, short-term, low-cost adaptation measures can be considered alongside resource- intensive, long-term capital investments. A mixture of measures, including no-regret and climate- smart adaptation as well as early adaptation for future options can constitute a portfolio. Developing such a portfolio helps to create adaptation pathways and ensures that benefits of adaptation are delivered early on, while still allowing to invest in longer-term systematic changes. The scale-up of plans and early steps for longer-term investment also provide opportunity for learning, monitoring, and evaluation. This can happen by scaling up adaptation over time as risks evolve or getting better information before tackling expensive options, such as retrofitting. This process can help to improve future decisions and enables to undertake ongoing multi-decade investments. These portfolios often work well when they include a mixture of technical and nontechnical (hard and soft) options and of green and grey measures. • The adaptation measures developed as part of national and sectoral studies can be used as inputs for macroeconomic studies but only in a limited way. The Romania case study illustrates how disasters in key sectors pose risks to the macroeconomy, affecting GDP, fiscal revenues, and overall fiscal balance, and examines the costs of adaptation for extreme events like heat waves, wildfires, floods, and droughts. The findings, largely based on literature reviews and expert consultations, provide only a reference range for adaptation costs, underscoring the need for more comprehensive, tailored sectoral analytics. Macroeconomic impacts are also underestimated when only single hazards are considered and the economic representation of impact channels and estimates is limited. The study highlights the challenges of incorporating adaptation effectively into macro models. Overreliance on high-level, stylized benefit-cost ratios and the preliminary nature of the macroeconomic impact assessments indicate a need for more comprehensive, tailored sectoral analytics. Enhancing macro models to consider extreme events and developing in-depth adaptation studies across sectors are crucial for a more accurate representation of damage and adaptation pathways. • Replicability and scalability of analysis at the national level are improving. Methodologies for undertaking the costing of CCA at the national level exist and have been applied in a variety of contexts (Austria, Bulgaria, France, Germany, and Romania, among others), although the level of complexity and comprehensiveness of the CCA measures considered have differed. Once a costing framework for a measure is established, the potential for replicability and scalability is good, recognizing that each costing process will need to be adjusted for differences in climate, demographics, geography, prices, and other aspects of the country context. • Countries can balance both immediate and long-term adaptation strategies to tackle hazards and encourage more research on the costs and scalability of resilient forestry measures. As the case studies for Bulgaria and Sweden show, CCA measures can reduce wildfire losses and yield substantial co-benefits, such as mitigation of greenhouse gas emissions, reduced loss to timber production, and enhanced ecological value. These measures can include capacity building and awareness campaigns, improved monitoring and surveillance, adaptive management, and climate-smart forestry. Involving all stakeholders, including private forest landowners, will be important to help increase community understanding and acceptance of these measures, especially as the measures may require trade- offs. More early preparation needs to be encouraged for new climate risks that a country may not yet have experienced. The Sweden case study identifies issues concerning new types of wildfire risks (for example, from peatlands) or compound risks to forests from multiple hazards, where early planning would be beneficial. For Sweden, the analysis focused on prioritizing and costing a set of early actions to address the rising risk of wildfires for the forestry sector, including potential no-regret options, interventions to address lock-in risk, and early adaptation pathway actions, all of which could be justified based on their net economic benefits. Importantly, opportunities are present for Member States to learn from each other’s experiences. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 79 • CCA measures in the transportation sector can be designed to address systemic vulnerabilities in assets, networks, institutions, and planning. As shown by the Romania case study, strengthening climate resilience in the transportation sector requires a concerted package of measures going beyond standard engineering upgrades. Governments, in partnership with key stakeholders, can define and implement a consistent strategy to overcome the many obstacles to more resilient transportation systems. A focus on the early stages of infrastructure system development—the design of regulations, the production of hazard data and master plans, and the initial stages of new infrastructure asset design—is particularly important. These investments can significantly improve the overall resilience of infrastructure systems and generate large benefits. As they generally help enhance governance and efficiency, these solutions are no-regret options regardless of climate change. For Romania, the estimated cost of climate-proofing the transportation sector for resilience to floods is between €123 million and €491 million. • Even if climate-proofing is not the main objective of a retrofitting program of a portfolio of buildings, simple CCA measures can support it without imposing additional major costs. When planning for the prioritized upgrading of a portfolio of assets of which CCA is not necessarily the main or single objective, CCA costing analysis can be useful to gain a better understanding of possible no- or low- regret options for the design or retrofit, as showcased in the case studies for Croatia and (fictional) Aurelia. These measures can help infrastructure withstand average climate change impacts (for example, through increased energy efficiency and insulation or measures for indoor temperature regulation related to temperature increase) and support risk reduction (through fire safety standards or the allocation of equipment, electricity networks, and functions across buildings to mitigate flood risk). This kind of costing can inform smart prioritization and decision-making and help with the practical integration of the disaster and climate change agendas. Overview of case studies The purpose of this chapter is to present analyses of hybrid approaches set out in the previous chapter, selected case studies to illustrate “use cases” for while the country case studies were selected based costing CCA from the perspective of policy- and on six criteria:248 (i) additionality and complementarity decision-makers. The concept of use cases was to existing and ongoing analytics; (ii) available data developed in a DG CLIMA study from 2020 on and information at national level; (iii) relevance to adaptation modeling247 and refers to a generalized allow the application of methods in various contexts; application of adaptation in particular decision- (iv) relevance of climate-related hazards of focus in making contexts. This report presents three use terms of expected risk and potential economic cases—national planning, sectoral planning, and impacts (wildfires, heat, floods etc.); (v) level of programmatic planning—which were determined interest in expected results and ability to collaborate based on reviews of the literature and of methodology in the study from relevant national stakeholders; and and on consultations. They are complemented by (vi) feedback from European Commission (EC) case studies to provide specific examples of the use stakeholders (see also Annex 3). of adaptation models to support decision-making that can serve as partial or full illustrations of the use The use cases for this report can be outlined in cases. The use cases focus on the policy-first and detail as follows: 247 EC. 2020. Study on Adaptation Modelling. Report on Use Cases and Rapid Analysis. 248 Only EU countries are considered in the process of case study selection, although examples from countries outside of the EU are included in the report as well as a part of literature review, including the United Kingdom and the United States, among others. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 80 • National planning refers to CCA costing undertaken undertaken from a programmatic perspective, from a high-level perspective, generally oriented generally oriented most toward implementing mostly toward national governments and agencies. The process generally begins with hazard particularly line ministries tasked with coordinating analytics applied to climate risks to specific assets CCA efforts and ministries of finance. The process and associated analysis of response measures, may begin from a public financial management or whether infrastructure measures (for example, macroeconomic perspective and/or that of a flood protection) or soft measures (such as early National Adaptation Plan (NAP) or program. It is warning systems). Detailed vulnerability analytics undertaken for key climate risks and at aggregated are usually considered. This type of costing analysis levels across sectors in a cross-cutting manner. is generally useful for prioritizing measures and This type of analysis is useful for estimating CCA investments within programs, whether for a costs at a national level and allows for a broad portfolio of investments or single investments, and tracking of implementation and dedicated lines in can also be used to track costs of CCA programs. It national budgets. The results can also be used to is also useful for evaluating cost-effectiveness and inform green budgeting and achieve the EU’s for the cost-benefit analysis of programs ex ante Green Deal objectives or national development and ex post. Civil protection agencies, for instance, priorities, including climate actions. The case can apply it to plan their budgets, produce detailed studies that illustrate national planning in this adaptation investment plans, and inform sectoral report are of Bulgaria and Romania (new adaptation planning by line ministries (see above). quantitative analysis) and Austria, France, This type of costing is also often used by Germany, and the United Kingdom (presentation implementing agencies at local or regional levels of of external results). government. The case studies that illustrate programmatic planning in this report are of Croatia, • Sectoral planning refers to CCA costing undertaken Romania, and the fictional Aurelia (new quantitative from a sectoral perspective, generally oriented analysis) and Italy and the Netherlands (existing mostly toward line ministries. Costing includes the studies). analysis of certain climate risks using detailed biophysical models, looks at impacts of hazards, or Based on a detailed review, various methodologies takes “lighter-touch” approaches that compile and approaches were selected for the analysis of existing information and work up adaptation costs. the three use cases to identify options and provide This type of analysis is useful for estimating how different perspectives. To compare results and much the implementation of policies will cost and approaches within certain use cases, two countries for investment planning by line ministries (such as or more were analyzed per use case, including the health and transportation) and to inform presentation of at least one new quantitative analysis implementation of CCA generally in detail. Line conducted for this study. An overview of the ministries can also use it in advocacy for allocation methodologies and approaches used in this chapter of national budget lines to their sectors. The case is provided in Figure 7 in Annex 2. The methodologies studies that illustrate sectoral planning in this used called for different levels of data and information report are of Romania and Sweden (new (see Table 8 in Annex 2), with granular data and quantitative analysis) and Austria, Spain, and the information required for climate risk analytics on the United Kingdom (existing studies). effects of extreme heat, wildfires, or floods to inform and prioritize adaptation measures.249 Disaster losses • Programmatic planning (also referred to as under future climate were based on robust climate investment portfolio planning) refers to CCA costing projections considering one or more global warming 249 Historical data on disaster occurrence and impacts were usually obtained from national institutes and/or the EU database or analytics, such as the PESETA study, EFFIS, JRC hazard risk assessments, and the Copernicus Climate Change Service, and from the existing literature. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 81 scenarios. Results from risk assessments,250 previous or carbon taxes, or alternative valuation methods for World Bank analytics, such as Country Climate and key parameters, such as the value of a statistical life Development Reports (CCDRs), and modeling or the value of life lost with respect to changes in the conducted by the CIMA Foundation were used, as risk of fatalities. The value of a statistical life (VSL) is well. All the data on historical and future hazard risks a concept often used in benefit-cost analysis to and impacts provided a solid basis for the CCA costing estimate the monetary value of preventing the loss of analysis in this report, which took various forms, a single human life. It represents the amount of including sector, program, project, and activity-based money society is willing to spend to reduce the risk of costing; investment and financial flow (IFF) analysis; fatality in various activities or situations. In the studies decision support tools; and sector-integrated presented, a VSL of €6 million was used, based on a assessment and damage costs. study by Viscusi and Masterson.252 Lower-bound estimates for sensitivity analysis used a VSL of €2.24 In terms of parameters used for economic analysis, million, based on a study by Banzhaf.253 National the analysis generally followed EC guidelines. The carbon valuation prices or carbon taxes were used to social discount rate considered, for example, was assess the costs of carbon emission. Analyses for usually 5 percent based on the guidelines,251 and which the national prices were not applicable—such sensitivity analysis was performed for various rates. as the Sweden case study—used the shadow carbon This sensitivity included other key parameters—for price from the EC, which suggests a current price of instance, whether to use shadow carbon prices from €131/t CO2e and a 2045 price of 660/t CO2e, based the Commission, or national carbon valuation prices on an EC technical guidance.254 National planning assessment of CCA costs A D D E D VA L U E A N D CO M PA R I S O N TO supplemented by lessons learned from existing E XT E R N A L N AT I O N A L A S S E S S M E N T S external case studies on Austria, France, Germany, and the United Kingdom. CCA measures were costed The purpose of the national planning use case is to with a focus on specific hazards and portfolios of demonstrate a generalized application of costing adaptation measures in selected sectors. The new methods for short-term policy-first adaptation case studies provide a more and comprehensive assessments. The objective is to inform budgetary estimate of the costs of adaptation in specific sectors planning and prioritize national CCA needs. For this and considering specific hazards and reveals that the use case analysis, two new case studies were CCA costs in some existing high-level assessments developed for Bulgaria and Romania and may have been underestimated. 250 WB and EC. 2024. From Data to Decisions: Tools for Making Smart Investments in Prevention and Preparedness. 251 EC. 2014. Guide to Cost-Benefit Analysis of Investment Projects for Cohesion Policy 2014-2020. ISBN 978-92-79- 34796-2. Link. “Reference is made to the Commission Guide, which explains the social discount rate. The guide recommends that for the social discount rate 5 percent is used for major projects in Cohesion countries and 3 percent for the other Member States. Whereas the guide refers to the period 2014-2020, it remains a useful reference for the period 2021-2027.” EC. 2021. Commission Notice — Technical guidance on the climate proofing of infrastructure in the period 2021-2027. Link. 252 Viscusi and Masterman. 2017. Income Elasticities and Global Values of Statistical Life. 253 Banzhaf, S. 2022. The Value of Statistical Life: A meta-Analysis of Meta Analyses. Link. 254 European Commission. 2021. Technical guidance on the climate proofing of infrastructure in the period 2021-2027, 2021/C 373/01. Official Journal of the European Union. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 82 The use case analysis was built on a mixture of new • Step 5: Developing a systematic process for and existing data and information. CCA measures to costing adaptation measures, including benefit- be analyzed were extracted from NAPs, as well as cost analysis (BCA), with an approach to costing designed based on new climate risk and economic aims that was consistent, transparent, and analysis undertaken here. For both Bulgaria and repeatable to ensure the comparability of CCA Romania, the disaster and climate risk information measures to each other and across different time used was on wildfires and extreme heat. In Romania’s scales case, additional analysis considered flood risk, with sectoral outcomes then examined to determine potential macroeconomic impacts with and without NEW ASSESSMENTS AND LESSONS LEARNED adaptation. The analysis used newly developed approaches and adapted methodologies already in Bulgaria: Informing NAP updates with costs of use in other countries, such as Austria, France, measures for adapting to wildfires and extreme Germany, Türkiye, and the United Kingdom.  heat Building upon previous studies, the two new case Bulgaria is prone to multiple climate-related risks, studies were developed in five steps: many of which are projected to worsen with climate change. Bulgaria presently faces an increasingly • Step 1: Identifying adaptation objectives and disrupted future because of projected climate options and categorizing adaptation measures (for change, with its induced temperature increase and example, no- and/or low-regret actions or actions associated risks of wildfires, droughts, and heat for climate-smart or early adaptation) in a sectoral waves.256 The National Disaster Risk Profile adopted context, considering short- and medium-term in 2023 provides a detailed assessment of 14 major horizons and including a review of the state of the disaster risks faced by the country. Analysis building art and state of practice of the considered measures on the risk profile predicts an increase of 50 percent with reference to their relevance, applicability, and in the number of heat-related deaths and ease of implementation hospitalizations over the next three decades. The National CCA Strategy 2019–2030 includes a very • Step 2: Baselining the “current” situation in terms comprehensive analysis on the impact of climate of KPIs,255 deriving the baseline situation from change on nine essential economic sectors in available data sources and additional analytics Bulgaria. To complement this existing national material, further work was undertaken to provide • Step 3: Bundling the measures into thematic further insights into the possible changes in climate portfolios according to their effects on specific risks related to heat and wildfires, based on EC KPIs to improve their overall effectiveness studies, such as COACCH, and the new quantitative analytics performed under this project (see below for • Step 4: Demonstrating simple procedures to details). evaluate the benefit to the KPIs of the considered adaptation measures with respect to the baseline Bulgaria has enhanced its strategic planning and and, thereby, identify strategies for investing in related legislation in recent years. Based on its adaptation National Risk Assessment (NRA), the National DRM Plan outlines a set of policy measures for each hazard. The government of Bulgaria also developed a framework for CCA action as part of its National CCA 255 KPIs with respect to extreme heat, for example, could include vulnerability to heat exposure, heat-related mortality and morbidity, loss in productivity, energy consumption, water usage, and so on. 256 Council of Ministers. 2022. National Disaster Risk Profile of Bulgaria: Technical Annex 7: Assessment of Extreme Heat Risk in Bulgaria. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 83 Strategy and Action Plan for 2019–30.257 The strategy initiatives, such as the climate-proof retrofitting of provides and proposes a series of adaptation options health and public facilities. for each sector, with a particular focus on no-regret and non-capital-intensive measures. The Action Plan The analysis undertaken in this study can inform the provides an estimate of the expected cost of each development of adaptation programs aligned with measure; these estimates are, however, designed to Bulgaria’s current NAP as well as updates of the serve as general guidelines and are mostly NAP in the medium term. The objective was to represented by a broad budget cost categorization of develop and cost a set of adaptation portfolios for a low (up to €1 million), medium (€1 million–€100 number of key risks to help inform the government in million), or high (€100 million or more). its steps toward the development and implementation of specific National Adaptation Plans and investments. Bulgaria has also accessed portions of the available funding opportunities under the EU 2021–27 This analysis built on existing work undertaken at funding cycle for climate adaptation and disaster country level and on best practices from other risk management. The government has accessed countries. It considered CCA measures identified funding through the Cohesion Policy’s “greener, low under Bulgaria’s CCA Strategy and National DRM carbon transition”258 objective, amounting to Plan, as well as other key strategic documents. As €2.4 billion overall, with €225.6 million dedicated to measures in these documents were broadly defined, CCA.259 Under the Operational program (OP) this analysis derived more specific measures and Environment, aligned with its National Disaster Risk identified additional measures to be considered Management Plan, Bulgaria aims to improve based on the results from climate risk analytics (see prevention of extreme events, modernize DRM Box 6). It also considered local and international best practices (floods, droughts, forest fires) and practice, as demonstrated for instance by the Sofia implement green measures and ecosystem-based Municipality Sustainable Energy and Climate Action solutions for flood prevention and protection.260 Plan 2021–30; the CCA and DRM action plans of Additionally, Bulgaria has the potential to utilize a other EU Member States; the extreme heat adaptation portion of its allocated €7.7 billion for overall Common strategies for cities in Europe and worldwide; the Agricultural Policy (CAP) funds to address climate- academic literature; and other sources. The overall related challenges and has allocated a percentage of methodological approach was also inspired by its National Recovery and Resilience Plan to climate analytics undertaken in Austria, France, the United objectives for 2022–25, focusing on agricultural and Kingdom, and other countries, as well as the academic water management sectors.261 Notable national literature (more than 200 reports and papers were investment programs include the €1 billion Energy reviewed - see Annex 3 and technical unpublished Efficiency of Multi-Family Residential Buildings background note available upon request). National Program 2015–24 and various isolated 257 Republic of Bulgaria. 2019. National Climate Change Adaptation Strategy and Action Plan. Link. 258 Intervention areas under this policy area include CCA measures for the prevention and management of climate-related risks: fires, storms, droughts, floods, landslides (including awareness raising, civil protection and DRM systems, infrastructure and ecosystem-based approaches) Also included are risk prevention and management of non-climate-related national risks, such as earthquakes, and risks from human activities, such as technological accidents. Overall, for CCA measures, €13.9 billion has been spent by the EU under these funds and €18.8 billion in total. EC. 2023a. Cohesion Data.Link. 259 EU. 2023a. Link. 260 EC. 2022. Partnership Agreement with Bulgaria – 2021-2027. Link. 261 Government of Bulgaria. 2020b. Recovery and Resilience Mechanism [Механизъм за възстановяване и устойчивос]. Link. See Government of Bulgaria. 2020a. NRRP for Bulgaria. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 84 BOX 6. DEEP DIVES INTO PROJECTED CLIMATE RISK FOR WILDFIRES AND EXTREME HEAT The analysis for Bulgaria built on new analytics undertaken Several findings on wildfire provide new and interesting under this project for wildfire and heat risks and impacts. insights into the changing risks Bulgaria will face with These complemented results from the NRA262 by climate change. The assessment found wildfire considering the influence of climate change on susceptibility, as well as the overall wildfire hazard, generally environmental variables and wildfire hazard, quantifying expected to increase in the coming decades, with changes social vulnerability and coping capacity,263 and evaluating that will vary in different parts of the country in the types of the average annual losses from wildfires. Future wildfire risk fires expected. In numerous lowland locations, the risk is and impacts were projected for various climate scenarios,264 expected to rise (that is, the likelihood of occurrence of low- considering multiple climate models, for 2030s and 2050s intensity surface fires could increase from low to medium). horizons. On extreme heat, results from the academic Regions with higher elevation and predominantly coniferous literature and previous analytical efforts, such as the forests are also likely to see more fires. This is especially COACCH project,265 heat wave data from the Copernicus alarming in areas with large coniferous forests, where fires Climate Change Service,266 and new analytics that built on tend to spread rapidly, posing greater threats to human life, the National Disaster Risk Profile, were used to gain an property, and the environment. Bulgaria’s ratings on the understanding of the current and future effects of heat on Wildfire Social Risk Index which, apart from wildfire hazard, human health and productivity. More generally, the considers social factors and coping capacity, are given as analytics were used to ascertain the scale of investment high and extreme for numerous Bulgarian municipalities, needed to undertake selected relevant CCA measures. The predominantly in the mountainous regions in southern and analysis is relevant to EUCRA’s “Prolonged Heat and southwestern Bulgaria and in the foothills of the Stara Drought” storyline, as it shows the serious consequences of Planina mountain range in central Bulgaria. In terms of the urban heat island (UHI) effect and extreme heat waves annual losses to assets and critical infrastructure as a result and assesses the costs of selected CCA measures that can of wildfire, an overall increasing trend was projected for the reduce heat-related health impacts, such as heat health next 25 years. The assessment of risk to roads also yielded action plans, heat early warning system (HEWSs), and increase in losses with large variability under different urban greening. climate scenarios. Finally, while wildfire hazard is generally increasing, the number of potentially affected people is expected to remain constant or have small decreases, due to the projected reduction of the population. The process sought to be consistent, transparent, were analyzed; Box 7 provides an example of the and replicable and to serve as a blueprint for other costing for a specific measure addressing heat national assessments. Both the impacts of selected (HEWS). In brief, the analysis followed a four-step adaptation measures on a set of KPIs and their costs approach: 262 More details can be found in the Annex. 263 Commercial, residential, industrial, health care, and education facility exposure data were shared by the Global Earthquake Model (GEM) Foundation. Publicly available regional data were ground-truthed and complemented by national datasets covering fire and police stations. The key vulnerability factors considered were age, gender, income level, and education and income levels at local level. They were determined were based on data from GEM, Global Human Settlement (GHS), the literature (Fekete, A. and Nehren, U. 2023. Assessment of social vulnerability to forest fire and hazardous facilities in Germany. Link.), the European Forest Fire Information System (EFFIS) dataset, Corinne Land Cover, Copernicus Climate Data Store climate data, and national datasets. The coping capacity indicators considered were derived from data on firefighting facilities, number of employees, accessibility, and prevention and preparedness activities based on national datasets. 264 RCPs 2.6 / SSP1, RCP 4.5 /SSP2 and RCP8.5 / SSP5. 265 COACCH. 2022. CO-designing the Assessment of Climate Change Costs. (including data repository). Link. 266 Hooyberghs, H., et al. 2019. Heat waves and cold spells in Europe derived from climate projections. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 85 • Step 1: Selecting and screening CCA measures. applicable to every measure: implementation Based upon specified parameters, a range of costs, also known as development or set-up costs; possible adaptation measures—which could be annual operating or fixed costs; and annual costs applied in isolation or as part of a suite—were related to extreme heat events. The last two considered, focusing on those related to extreme considered future climate and demographic heat (specifically, related to human health, projections. Where appropriate—for example, in productivity, and comfort) and wildfire risks. These the context of adaptation measures for new and/or measures were defined by drawing upon existing existing health care facilities—the marginal costs national plans in the case study country—in this associated with specific adaptation strategies were case, Bulgaria—and a review of global best-practice considered. Two types of costs were included: a examples. five-year outlook cost that was undiscounted and was intended for short-term budget planning; and • Step 2: Creating portfolios of CCA measures, a net present cost (NPC) for the period 2023–50, considering their impacts and benefits. A set of key which used a 5 percent discount rate and was performance indicators (KPIs) relevant to some of intended to gain an understanding of the overall the considered risks (specifically, those addressing scale on investment required in the medium term. extreme heat) was defined to gain an understanding It needs to be highlighted that this case study of the impact of the selected adaptation measures. provided indicative, high-level national cost Selection was based on indicators commonly used estimates predominantly based on the academic in the literature for the specific hazards, including literature and previous project costs, adjusted to indicators related to environmental, economic, the Bulgarian context and prices. Where possible, policy, energy, and social impacts. These KPIs data were gathered from Bulgarian institutions, included, for example, heat-related mortality and but, in many cases, costs were taken from similar morbidity and changes in labor productivity EU or global initiatives and from the literature. resulting from extreme heat. The CCA measures were then bundled into portfolios according to their • Step 4: Assessing the benefit of CCA measures. effects on the selected KPIs. In the context of heat The impacts of the identified CCA measures and adaptation, for example, portfolios of measures pathways could be evaluated—in isolation or in were created that affected KPIs in two thematic combination—through, for example, cost-benefit areas: health; productivity and comfort. Each of analysis or by computing the levels of risk reduction the portfolios considered a mixture of adaptation associated with the CCA measures. From the types, including no-regret, climate-smart perspective of the risk analysis, it was necessary to adaptation and early adaptation for future options, attempt to quantify the spectrum of projected risk which together create different adaptation reduction impacts to gain a better understanding pathways. of the range of possible outcomes. For the Bulgaria case study, the particular CCA measures whose • Step 3: Assessing the costs of the selected CCA benefits were investigated included the impacts of measures. The measures were costed based on the heat early warning system and national heat information determined from national reports and health action plan on mortality and morbidity. other literature sources. The costs were benchmarked and price-adjusted using Based on the research conducted, the average costs of comparable investments in EU countries and adaptation for a subset of sectors and hazards in Bulgaria existing projects and programs in Bulgaria. Given were estimated at €7.01 billion for a five-year period the breadth of the CCA measures, the costing of (undiscounted), with a net present cost for 2023–50 of each CCA measure had to follow a tailored cost €22.9 billion. The breakdown of costs for the various estimation approach. Generally, three types of measures and their associated potential benefits are costs were considered, although not all were summarized in Annex 3, Tables 10-13. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 86 BOX 7. COSTING OF A HEAT EARLY WARNING SYSTEM FOR BULGARIA Estimation of the cost of a heat early warning system were calculated using data on the annual number of (HEWS) in Bulgaria took into account implementation projected heat wave days for the period (under RCP 8.5)268 costs, fixed operating costs, and additional costs associated and the estimated cost per heat wave day, which include with triggering the system during a heat wave. The costs emergency services and the maintenance of a phone line, were developed for 2023–50 (considering a 5 percent dissemination campaigns, media announcements, discount rate) and benchmarked using similar systems in programs that would provide extra care to vulnerable other countries, including Belgium, France, Spain, and the groups, and the time contributed by health professionals United Kingdom. All prices were adjusted to 2022 Bulgarian primarily involved in the care of local residents in their prices (in euros) using Organisation for Economic Co- homes. The average number of heat wave days across operation and Development (OECD) purchasing power Bulgaria was projected to increase from 9 in 2023 to 22 in parities and the OECD’s harmonized index of consumer 2050, and the NPCs of lower- and upper-bound variables prices. The net present costs (NPCs) for implementation associated with the events were estimated at €2 million and operation (considering 2023–50 operation) were and €6.72 million (average €4.1 million). Finally, the total estimated at €0.17 million and €3.01 million, respectively, cost of implementing, maintaining, and triggering a HEWS based on the costs of France’s heat wave and health alert in Bulgaria for 2023–50 was estimated at system and other costs estimated in the literature.267 These €5.18 million–€9.9 million (average €7.28 million in included initial investment in system setup, as well as present value terms), where the five-year outlook cost was ongoing human resource costs, annual contract fees, and €1.63 million–€2.81 million (average €2.15 million, so on. The costs associated with annual heat wave events undiscounted). Overall, the following cost ranges were estimated • Heat/productivity and comfort: The portfolio for the respective portfolios of CCA measures: comprised six sub-packages of measures: (i) labor force heat protection strategy; (ii) improved access • Heat/health: The portfolio comprised seven sub- to cooled public transportation; (iii) building packages of measures, all costed separately standards for new development; (iv) building considering implementation and operating costs: improvements to existing buildings; (v) urban heat (i) national heat health action plan (NHHAP); (ii) island (UHI) strategy at city level; and (vi) urban heat early warning system (HEWS); (iii) data greening and blue solutions. It should be noted collection system for heat-related illness and that two of these sub-packages were costed for mortality; (iv) establishment of cooling centers; (v) Bulgaria only in a simple manner (UHI strategy) or design of new health care facilities for heat not fully costed (blue/green solutions) ; the ranges resilience; (vi) heat resilience improvements to of costs for them, based on the literature, are existing health care facilities; and (vii) information provided later in this section. The ranges below campaigns and awareness raising. were estimated for the four measures that were costed specifically for Bulgaria. o Total five-year outlook: €1.67 billion–€2.79 billion (average €2.23 billion) o Five-year outlook: €3.12 billion–€5.82 billion o Total net present cost, 2023–50: €4.2 billion– (average €4.47 billion) €7.67 billion (average €5.93 billion) o Net present cost, 2023–50: €10.86 billion­– €22.46 billion (average €16.66 billion) 267 Hunt, A. et al. 2017. 268 Based on the health-related EU-wide definition, based in turn on results of the EUROheat project (Michelozzi et al. 2007; WHO 2009). For the summer period of June to August, heat waves were defined as days in which the maximal apparent temperature (Tappmax) exceeded its threshold (90th percentile of Tappmax for each month) and the minimum temperature (Tmin) exceeded its threshold (90th percentile of Tmin for each month) for at least two days. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 87 • Wildfires (emergency management): The portfolio programs related to upgrade of infrastructure should comprised five sub-packages of measures, all begin as soon as possible because of their long costed separately: (i) strengthening of fire implementation timelines and the large budget responders’ capacity to cope with wildfires; (ii) requirement. To optimize the investment process and creation of a team for airborne firefighting and minimize maladaptation, such programs should also purchase of the necessary specialized aircraft and have a level of built-in flexibility and opportunity for other equipment; (iii) building of a national system evaluation and adjustment. for rapid fire detection and for response to fire and other natural calamities; (iv) education and public The analysis also covered several no-regret options outreach activities; and (v) legal activities for related to human health, including the improved fire risk management and responsibility. implementation of heat early warning systems and strategies to protect the population, especially • Five-year outlook: €247 million–€302 million vulnerable people, against heat. One conclusion was (average €275 million) that many of the early investments—for example, in HEWS and NHHAP—would have relatively low costs • Wildfires (forestry): The portfolio comprised two and deliver high benefits and, thus, would be no- sub-packages of measures: (i) improvement of the regret. Such investments could build upon existing plans for protection of forest territories; and (ii) fire coordination mechanisms and existing infrastructure. mitigation and risk reduction actions in forest and In this and other cases, the importance of considering agricultural lands. the marginal investment costs was highlighted from the perspective of development and the costing of • Five-year outlook: €35.1 million–€42.9 million CCA measures. (average €39 million) Climate-smart heat adaptation options with longer It should be noted that several CCA measures timeframes were mostly related to the upgrading of considered in the analysis are planned or ongoing. critical infrastructure and building stock by Large-scale investments in the climate-proofing of improving cooling systems. The largest costs residential buildings, for example, are planned associated with heat CCA adaptation were related to under Bulgaria’s National Recovery and Resilience capital investments and upgrades to the built Plan. A wide range of ongoing investments includes environment, including health care facilities, cooling the retrofitting of public buildings and the replacement centers, educational institutions, and the general of the public transportation fleet, as well as firefighting building stock. Such investments require multi- vehicles, as part of the EU’s multi-annual financial decade planning with agreed-on targets for new framework. building and retrofits, taking into account future changes in demographics and climate. Prioritization Also of note is that, because of the scale of the and planning are key, given the volume of the required required investment, nearly all of the costs (about work. The use of risk information and other 98 percent) for heat-related CCA measures would prioritization factors, such as social vulnerability, come from capital investments in infrastructure becomes crucial in structuring these long-term upgrade. Costs for extreme heat measures not related programs. The long time frames and limiting factors to infrastructure, such as HEWS, the NHHAP, around labor and resource availability and the limited information campaigns, the development of capacity of the construction industry mean that strategies, and so on, would amount to €34 investments in the built environment should begin in million–€37.4 million (average €35.6 million) over the the short term. Furthermore, since the investment next five years, with net present costs for 2023–50 involved in infrastructure upgrade at a national level from €109.6 million to €121.1 million (average is continuous in nature, it is important that their €115.1 million). While these costs would be an order progress be monitored, evaluated, and adjusted on of magnitude lower than capital investments, an ongoing basis to avoid maladaptation. To maximize Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 88 the co-benefits, the investments should be bundled areas with populations greater than approximately to form part of a larger package for building upgrade 8,000 were estimated at €1.26 million. This amount and new build – for example, an energy efficiency or did not include the cost of UHI strategy seismic retrofitting program. implementation, which varies depending on the specific urban landscape, environmental factors, and In addition to maintaining emergency preparedness population, and more country-specific data are and well-equipped and highly trained firefighting needed to provide a more robust cost estimate for the crews, a variety of measures related to forestry and country. Ideally, UHI strategies and reports should land use measures are necessary to mitigate wildfire include a proposed list of costed investments to risk. Appropriate planning at landscape level is mitigate UHI, including green, blue, and white essential and can be further enhanced by risk measures. Below is a summary of cost ranges for modeling. Such measures can help reduce the risk of selected greening and blue solutions in Europe from fire initiation, growth, and spread. Communication of the literature:270 the wildfire risk, which is expected to continue increasing with climate change, is very important to • Green solutions (green roofs): Implementation promote fire-safe behavior among the general cost €40–€310 per square meter; annual population. maintenance cost €1.20–€7.80 per square meter In terms of labor force heat protection strategy, the • Green solutions (gardens and urban parks): productivity losses associated with limiting labor Implementation cost €135–€850 per square activity and having safety measures in place may be meter; annual maintenance cost €3.40–€21.30 high, but they do not take into account the health per square meter benefits of having such a strategy in place. An important factor to consider is that most of the studies • Green solutions (street trees): Implementation and literature on reduction of labor productivity do cost €76.92–€125 per square meter; annual not quantify the associated health benefits and maintenance cost around €0.77–€3.10 per square avoided health impacts. More research is needed to meter gain a better understanding not only of the costs but of the benefits of the labor strategy. Productivity • Blue solution (ponds and lakes): Implementation losses can be mitigated by, for example, shifting labor cost €19.71–€554.73 per square meter; annual hours, mechanizing outdoor labor, and/or upgrading maintenance costs €277–€2,640 per basin cooling systems for indoor work. • Blue solutions (rain gardens): Implementation With regard to green and blue solutions in urban cost €49–€80 per square meter; annual areas to mitigate the UHI effect, the cost of maintenance costs €0.06–€2 per square meter adaptation has been explored, yet no quantitative estimates could be provided for Bulgaria at the Note, however, that the literature suggests the current stage because of a lack of specific, implementation costs of urban greening and blue quantitative information on UHI effects across adaptation measures, such as installing green roofs, Bulgarian municipalities and costs of implementing planting trees, and creating ponds and rain gardens, urban CCA measures. Based on existing studies,269 and the cost to maintain them are highly location- the total cost of developing city-level UHI strategies specific and differ greatly across cities. This means and supporting documents for one hundred urban such costs cannot be easily extrapolated for Bulgaria 269 Gkatzioura, P. and Perakis, K. 2022. Analysis of Urban Heat Island (UHI) Through Climate Engine and Arcgis Pro in Different Cities of Bulgaria. Link.; Dimitrov, S. et al. 2021. “An Application of the LCZ Approach in Surface Urban Heat Island Mapping in Sofia, Bulgaria” Link.; Arabadzhieva, G. Urban Climate Adaptation in Bulgaria. Wageningen University & Research Centre. Link. 270 The cost ranges in the summary showcase only the unit implementation and annual maintenance costs of common green and blue adaptation measures in Europe. They do not cover all the costs reviewed, as many of the estimates in the literature represent only the total cost and, thus, are not comparable to the unit costs. In addition, the cost ranges here only cover European countries, though global studies were reviewed as well. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 89 from the existing literature on other European access to sufficient relevant data (see below)—in countries. other words, this is not a simple copy and paste to another context. Consideration of a spectrum of projected climate impacts is central to understanding and gauging While this case study offers insights into several confidence in the outputs of the assessment. During climate risks in Bulgaria and proposes several the analysis, two main types of sources leading to a adaptation portfolios, the cost estimates are limited range of possible outcomes were determined: in some ways. The indicative, high-level national cost uncertainty related to costs, and the spectrum of estimates it provides are predominantly based on the projected climate impacts related to climate modeling literature and on previous project costs, adjusted to and, thus, risks and benefits. In terms of benefit the Bulgarian context and prices. Where possible, estimation, the ranges of outputs from climate data on costs were gathered from Bulgarian modeling played a significant role and resulted in institutions, but, in many cases, they had to come large variations. At the same time, in estimation of from similar EU or global initiatives or literature. An investment needs, the costs were less sensitive to the important finding of the analysis was that the costing ranges of outputs estimated in the climate modeling exercise is extremely data intensive, particularly at a and more sensitive to ranges of possible other factors local level, and that much of the required data are affecting costs (including implementation and missing or fragmented. When undertaking such an operating costs). In short, the ranges estimated for assessment, therefore, it is recommended to consider costs that depended on events occurring, such as the available data sources and data collection strategies costs of measures incurred during a wildfire or a heat at the outset. wave, represent only a fraction of the overall investment in CCA measures. To summarize, this study presents the costs of adaptation measures needed at the national level in The methodology developed for the Bulgaria case Bulgaria for selected hazards and sectors based on study, centered on heat and wildfire risk, a portfolio-oriented approach. The estimated cost of demonstrates a good potential for transferability to adaptation for wildfire and heat waves is €7.01 billion other contexts. Both the methodology and the for a five-year period, with most coming from capital analysis performed are scalable to other countries, investment into the upgrading of critical infrastructure although this will require the inclusion of site- and and the built environment. This equates to an annual context-specific considerations. The analysis requires CCA cost of €1.4 billion per year. The estimate is an audit of current and projected initiatives, relatively high compared to those from short-term, agreement on infrastructure lifespan, and attrition/ policy-first national assessments from the literature,271 augmentation rates for capital stocks (that is, the especially given that the case study considered only percentage of facilities to be retired from use and/or two types of hazards and four portfolio themes. If the upgraded over the considered time horizon). Critical cost were expressed in per capita terms, the annual to the analysis and the development of strategies are investment needs for adaptation would amount to considerations around market and sector capacity, €205 per capita,272 which is greater than the estimates supply chain issues, and climate projections. from all existing studies. The higher costs reflect Furthermore, governing bodies must provide capital-intensive projects, such as the climate appropriate design standards, guidance documents, proofing of residential buildings. The analysis of CCA and planning regulations that demonstrate measures has only considered costs (for some cognizance of the needs associated with a changing options); it has not undertaken a cost-benefit analysis climate. The transfer also requires skills, expertise, or a full options appraisal—and it may be that such and resources to replicate the analysis, as well as options are not economically efficient. Some CCA 271 See “Current evidence at EU level on CCA costs ranges” in Chapter 1. 272 Based on 2022 Bulgaria population obtained from Eurostat database. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 90 costs for the built environment may be underestimated Romania: Improving the evidence base for and suggests the importance of countries’ carrying macroeconomic analytics and NAP measures out comprehensive national assessments in a contextualized manner, based on hazard-specific Romania confronts significant vulnerabilities to risk assessments and careful selection of adaptation climatic threats, including floods, droughts, and portfolios. extreme heat events. These challenges have historically caused extensive socioeconomic damage: Moving forward, countries could conduct portfolio- since the 1980s, climatological and hydro­ oriented analysis of national adaptation planning meteorological events have caused economic loss for heat and wildfire. Measures considered for a amounting to €12 billion and almost 1,322 fatalities; particular adaptation portfolio should be oriented to a river floods alone have affected more than 368,000 set of KPIs of relevance to the thematic area, which people.273 Romania has high vulnerability in at least might include heat and health, heat and comfort and 7 out of 10 climate vulnerability dimensions relative productivity, wildfire and emergency management, to other EU and OECD countries, for which the median or wildfire and forestry. Structuring CCA measures in values are, respectively, 2 out of 10 and 4 out of 10 portfolios also results in more holistic and outcome- (see figure 19).274 The recent wildfire crisis also oriented cost estimation. Given the breadth of the highlighted the nation’s susceptibility, both by its measures within a given portfolio, appropriate budget estimated €1.5 billion in financial costs and by the considerations and multiagency coordination CO2 emissions produced. The 2022 event was ten structures could be put into place. times as destructive as the average of the previous 15 years.275 Within a portfolio, short-term, low-cost adaptation measures can be considered alongside resource- Projections suggest impacts will intensify as a result intensive, long-term capital investments. Such a of climate change. By the 2080s, Romania could mixture of measures, which include no-regret and witness a significant escalation in damage from climate-smart adaptation and early adaptation for extreme climatic events, potentially increasing future options, creates adaptation pathways and sixfold,276 along with substantial macroeconomic ensures that some benefits of adaptation are impacts from the combined effects of multiple captured early on, while still investing in longer-term hazards in multiple sectors (see Figure 19 and systematic changes to the built and natural Figure 20, and for more details Figure 25 in Annex 3). environments. Early planning and the start of large Particularly concerning is an anticipated surge in the capital investment also provides the opportunity for frequency and intensity of heat waves, exacerbated monitoring, evaluation, and optimization of ongoing by urban heat island effects.277 These climatic multi-decade investments, such as improvement of hazards are compounded by others, including heat resilience in existing health care facilities and earthquakes; Romania is one of the three EU the general building stock. countries with the highest seismic risk.278 273 MunichRe. 2023. Data on natural disasters since 1980. MunichRe NatCat database. Link. 274 Due to lack of data, these figures are preliminary and not meant to provide a full overview of economic impacts. 275 City Monitor. 2022. The cost of Europe’s summer of wildfires. Link.; based on EFFIS data. 276 IPCC. 2021. Link.; Climatic events included floods, droughts, fires, landslides, epidemics, and zoonoses (infectious diseases that are transmissible between humans and animals). 277 WB. 2023. Romania CCDR. Link. 278 WB and EC. 2021a. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 91 Figure 19. Climate risk and vulnerability in Romania compared to EU and OECD countries Source: World Bank staff calculations, based on data from Climate Impact Explorer; Kulp and Strauss 2019; Rentschler et al 2022; UNISDR 2015; World Development Indicators; and the World Bank Climate Change Knowledge Portal. The presented indicators are a selection of drivers of risk in OECD countries. Countries are rated using a benchmark approach: those rated at high risk (red) are in the top third, medium risk (yellow) are in the middle third, and low risk (blue) are in the lowest third. Figure 20. Projected compounded macroeconomic impact of climate change in Romania Compounded climate change impact on EU GDP impacts by region in years 2030, 2050 and 2070. Medium impact case. SSP1-RCP2.6 scenario combination upper panel and SSP5-RCP8.5 scenario combination lower panel. Values in percentage change from the baseline. Source: COACCH. 2020. Bosello et al. 2020. D2.7. Macroeconomic, spatially-resolved impact assessment. Deliverable of the H2020 COACCH project. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 92 Recognizing these challenges, Romania has fortified budget adjustments for unexpected disasters.283 its strategic planning and legislation with regard to climate change. Following robust awareness For 2021–27, Romania has been utilizing EU campaigns on the EU Mission on Adaptation to funding for climate adaptation. The EU contribution Climate Change, ten Romanian Administrative- to Romania under Policy Objective 2 (PO2)— Territorial Units (ATUs) have championed local “greener, low carbon transitioning towards a net zero adaptation projects, underlining the importance of carbon economy”—of the Cohesion Policy amounts grassroots resilience planning. Alongside these to €7.9 billion of an overall €10.1 billion. Total CCA- efforts are Romania’s National Strategy for Climate specific funding from the EU under PO2 amounts to Change Adaptation (2023–30) and linked action €557.1 million, with an overall amount of €665.5 plan279 , which promise synergy with EU climate million.284 Romania has devoted 41 percent of its objectives and significant financial commitments. NRRP to climate objectives, allocating €1.4 billion to projects dedicated to climate adaptation for the Implementation-wise, Romania is demonstrating period 2021–26.285 The NRRP also includes the fiscal dedication to climate resilience. The NAP rehabilitation of existing defense lines, in accordance estimates that approximately €19 billion would be with the EU Floods Directive and the National Strategy expected to be allocated to 13 key sectors, with €15 for Flood Risk Management.286 billion earmarked for CCA initiatives across a total of six key sectors280 for 2023–30. Additionally, the This analysis can serve as inspiration for further government approved Flood Risk Management Plans adaptation studies and the development of adaptation for 2023–27, with an estimated cost of €2.4 billion,281 programs aligned with the current NAP, as well as for to be funded primarily by European funds updates of the NAP in the medium term. The objective (76.8 percent), national government funds in conducting it was to inform the costing of selected (12.5 percent), and the national administration adaptation measures to feed into macroeconomic “Romanian Waters” (5.8 percent).282 The Ministry of analytics, sectoral strategies, and national plans. Finance incorporates climate risks into its financial planning, drafting annual priority investment lists and The analysis built on existing work undertaken at developing a green budgeting framework. Challenges country level, complementing it with targeted remain, however, such as inconsistent disaster risk analytics. A review of CCA measures identified under reporting and fragmented data management. Local Romania’s NAP and Country Climate and governments often depend on intergovernmental Development Report (CCDR)287 was based on transfers for disaster response, potentially incurring updated risk analytics (see Box 8) and examples from 279 Awaiting Government approval as of February 2024. 280 As per the draft National Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030 – version as of August 2023. The strategy has been revised based on public consultation and it is expected to be approved in April-May 2024. These are estimates based on the CCA measures in 6 selected sectors in Romania (water resources, forestry, localities/urban systems, agriculture, energy and transport). In addition, the NAP also covers 7 other sectors: (1) biodiversity and ecosystem services, (2) population, public health and air quality, (3) education, awareness, research, innovation and digitalization, (4) cultural heritage, (5) tourism and leisure, (6) industry, and (7) insurance as a CCA instrument, which have not been covered in these preliminary calculations. 281 Excluding operation-maintenance costs. 282 Based on the Supporting note for the Government Decision on the updating the Flood risk management plans related to the 11 River Basin Administrations and the Danube River in Romania, approved by Government Decision nr. 972/2016. Link. 283 WB and EC. Forthcoming. EDPP2 - Component 3 - Bringing National and Regional Finance to Scale. 284 EU. 2023a. Link. 285 WB. 2023. Romania CCDR. 286 EC. NRRP for Romania. Link. Government of Romania. Green light from the EC for the NRRP (PNRR). Link. 287 The strategy has been revised based on public consultation and it is expected to be approved in April-May 2024.; WB. 2023. Country Climate and Development Report (CCDR) for Romania. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 93 other countries. The overall methodological approach such as the Türkiye,291 the academic literature,292 and was inspired by analytics undertaken in Austria,288 other case studies in this report, such as those for Germany,289 and Spain290 under World Bank CCDRs Bulgaria and Sweden. BOX 8. DEEP DIVES INTO CLIMATE RISK PROJECTIONS FOR WILDFIRE AND EXTREME HEAT The analysis for Romania built on the new risk and impact forecasts and scenarios concerning the impacts of and analytics developed for this project for wildfire and heat. adaptation to climate change, as well as the setting of The methodology and approach utilized were the same as medium- and long-term adaptation objectives for the for the Bulgaria case study. For extreme heat, however, only strategy. The RO-ADAPT platform295 was developed as part the impacts on productivity (as reported by the COACCH of an EU-funded project and implemented by several project) were considered, not the impacts on human health. ministries and agencies to improve climate change policies Information was obtained from external studies on floods293 and CCA by consolidating institutional capacity.296 The (for national cross-infrastructure impacts), the National project’s objective was to contribute to knowledge on the Risk Assessment (RO-RISK) from 2018, and COACCH and impacts of climate change, accelerate CCA actions, and from new analytics on droughts294 and the impacts of floods help enhance global resilience to climate change effects. on transportation infrastructure. Additional new information on heat waves and drought was produced after the NAP Several findings on wildfire provide new and interesting draft was finalized. The risk analytics helped illuminate the insights into the changing risks Romania will face with scale of investment and inform some potential follow-on climate change.297 In the future, a hotter and drier climate CCA measures, building on the NAP priorities. The will lead to increased wildfire susceptibility and risks, methodological approach aligned with EUCRA’s “prolonged especially in the southern, southeastern, and western parts heat and drought” storyline by showcasing the compounding of the country. The average annual loss (AAL) from wildfire effects of wildfire and extreme heat that cascade across in Romania in the 2030s and 2050s under different climate sectors, including both the direct losses inflicted during a scenarios (SSP1 RCP2.6, SSP2 RCP4.5, and SSP5 RCP8.5) disaster and the longer-term impacts, such as effects on will rise significantly, from around €1.37 million currently to productivity. The approach was also in line with EUCRA’s around €15 million in 2050 under all three climate message to enhance adaptation and resilience to heat scenarios. In addition, assessment of the impact of wildfires waves, wildfires, and droughts in key sectors, such as the on different types of buildings revealed the greatest AAL for urban, water, and agricultural sectors, by focusing on the residential structures, estimated at €7.59 million in 2050 costs of adaptation measures in them. under the SSP5 RCP8.5 scenario, followed by education and health care facilities, at €2.8 million and €2.1 million, Romania’s National Strategy for CCA and corresponding respectively. Under the same climate scenario, a general Action Plan were developed through RO-ADAPT, the decreasing trend was found in the numbers of people country’s climate change adaptation platform. An exposed to and affected by wildfire risk, considering future innovative tool that supports the updating of the regulatory population density. For roads and transportation networks, framework relevant to CCA based on the latest available the losses were characterized by oscillating trends for both information, RO-ADAPT made possible the development of SSP1 RCP2.6 and SSP5 RCP8.5 scenarios. 288 Knittel, N. et al. 2017. The Costs of Climate Change Adaptation for the Austrian Federal Budget. PACINAS Working Paper #04. Link.; Van der Wijst, K. et al. 2021. Link. 289 Tröltzsch, J. et al. 2012. Link; IÖW. 2021. Link. 290 Scussolini, P. et al. 2013. Link. 291 The strategy has been revised based on public consultation and it is expected to be approved in April-May 2024.; WB. 2022c. Türkiye Country Climate and Development Report. Link. 292 COACCH. 2021.; EC. 2018. Climate change adaptation of major infrastructure projects. Link. 293 Underlying data on flood impacts that informed WB and EC. 2021b. Financial risk and opportunities to build resilience in Europe. 294 IIASA. 2024 (upcoming). Romania drought impact assessment – deep dive report. 295 Government of Romania. 2023. RO-ADAPT. Romanian National Meteorological Administration. 296 The Ministry of Environment, Water and Forests (MEWF) in partnership with the Environmental Protection Agency, the National Environmental Guard, the National Agency for Protected Natural Areas and the University of Bucharest (UB) and a consortium led by the National Meteorological Administration. 297 The CIMA Foundation. 2023. Wildfire risk analytics for European Countries. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 94 With regard to drought, a comprehensive analysis of risk affected than the Danube. In the water sector, Romania’s across various systems and regions accounted for the water supply at present was found to be only mildly affected complex interplay among hazard, exposure, and by drought, but the country’s inland water transportation vulnerability factors.298 It found agriculture to be the sector losses were projected to increase from 1.4 percent to most affected, with 18 different crops significantly affected 3.25 percent by the 2100s. Droughts also will have varying and the AAL of crop yield projected to increase two- to impacts on Romania’s terrestrial and freshwater fourfold in the future, reaching up to 18 percent. For energy ecosystems, with increase in AAL mainly in the southern production, the projected AAL from drought varied from 2 and southeastern river basins for wetlands and the eastern to 10 percent (average 6.3 percent), with the energy basins for forests. production potential of the Romanian local rivers worse The analysis also helps fill crucial gaps in information and strategies for Romania, such as the Flood about adaptation in Romania that have been Reimbursable Advisory Services (RAS) 299 and the identified in strategic documents and dialogues. In NAP (see case study below for more detail). Previous the NAP, many CCA measures relate to improving consultations have indicated that such information information on climate risks and to the development on sectoral impacts from climate extremes and of plans, actions, and measures to support the natural hazards, as well as costed CCA measures creation of effective risk reduction investment related to DRM, would be useful to Romania’s Ministry programs and policies. These measures could be of Environment, Water, and Forests. A focused and considered as the fixed or initiation costs to select, selective overview of costs found in the literature define, and prioritize appropriate measures for could also be of interest to other countries considering reaching adaptation objectives. The costs of the similar CCA measures for their NAPs. prioritized measures will then have to be estimated. This study attempts to estimate or present some of In addition, this analysis investigated indicative, these costs, focusing on measures related to extreme high-level costs and benefits of adaptation measures heat, wildfire, flood, and drought risks, based on to be considered for macroeconomic modeling. The recently completed external analysis, the analytics main goal was to provide an overview of current conducted under this project, and consultation with methods and evidence complementary to other local experts and counterparts. studies, previous or ongoing, from the European Commission300 by looking at national studies. This The results of sectoral and programmatic adaptation investigation can be considered a starting point and analytics are summarized in Table 13 and Table 14, inspiration for sectoral and macroeconomic analysis, Annex 3. The costs of CCA measures can serve as as no single blueprint and methodology exists. It illustrative ranges of lower-bound costs to be focuses on inputs on impacts and adaptation measures confirmed and improved with further detailed for the macroeconomic models most commonly used assessments. The costs of CCA measures to enhance in the literature: the computable general equilibrium the resilience of transportation networks against (CGE) model and macrostructural models (MFMod, flood risk, for instance, were estimated. Adaptation Dobrescu). Major differences are outlined and more measures for the transportation sector were details on outcomes from previous assessments determined simply by transferring and adjusting provided in Box 16 and Table 16 in Annex 3. investment needs and benefit-cost ratios from the literature and applying an adjustment factor based on reasonable assumptions and insights from plans 298 World Bank. 2024 upcoming. Drought risk and resilience assessment in Romania; Note that the methodology is consistent with EDORA (European Drought Risk Assessment) and data shared by IIASA. The results are as of February 2024 as the final report has not yet been published. 299 WB. 2023. Report on advice provided to MEWF in the preparation of twelve (12) final draft Flood Risk Management Plans. Output 7 of the Floods RAS. 300 COACCH studies; EC DG CLIMA Ramboll. 2023. Macro-economic / top-down assessment of climate impacts on the EU economy. Interim draft report July 2023. When finalized, a summary of the findings will be included in the annex of this report. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 95 The analysis for this case study applied the Cobb- are summarized in Table 15 in Annex 3, which look at Douglas model and included several steps. First, the four hazards for which the most evidence exists in potential impacts of selected climate threats on the European context in terms of consideration for yields and labor productivity were gathered from macroeconomic modeling (earthquakes are not existing studies (World Bank/IIASA and COACCH). climate related and therefore not included). Their follow-on effects on growth, employment, fiscal indicators, and poverty were then assessed.301 The Adaptation measures against extreme heat were impacts were estimated separately for heat (see estimated to be effective in reducing substantial Figure 21) and drought. For drought, the average macroeconomic damage. In an RCP 4.5 climate impact for 2021–60 was estimated at 1.1–1.2 change scenario, the reduction in labor productivity percent of GDP, depending on the Representative was estimated at 1 percent or less of GDP by 2050, Concentration Pathway (RCP).302 The macro model depending on SSPs. This suggests the impacts from was “shocked” with extreme scenarios (extreme heat heat, while sizable, could be effectively managed event, drought, and so on) to look in more detail at the through local interventions, such as shifting working spectrum of projected climate impacts. A thorough hours to avoid the hottest periods of the day or examination of the model’s robustness was conducted installing shading and air circulation systems.304 by running a thousand simulations over a 50-year These relatively simple and cost-effective solutions forecast period. This extensive simulation exercise are supported by the research literature (see was designed to test the resilience of the economic technical unpublished background note available system against a variety of potential future climate upon request) and, per this analysis, would cost an conditions and events. The model was iterated so estimated €78 million annually in Romania’s many times to capture a wide range of outcomes based agricultural and industrial sectors. Such adaptation on different sequences of projected climate impacts measures can be scaled up rapidly and flexibly, and extremes. The results from these simulations depending on needs and budgets. Unlike, for would provide a comprehensive perspective on how instance, the implementation of flood protection climate change could influence economic stability and infrastructure—which requires long construction growth over the next half-century. times and major upfront capital investments—basic heat adaptation measures can be adjusted from year Finally, the analysis presented high-level adjustment to year by, for example, adjusting the number of days factors that could be considered for macroeconomic with shifted work hours. Such flexibility can help to impacts with and without adaptation.303 They could increase the probability of these measures’ being be considered specifically in the macroeconomic effective for a range of possible outcomes, given the analysis by transferring values from the literature and breadth of climate impacts also projected to affect adjusting them for the Romanian context and by their costs. In the absence of such measures, extreme validating and comparing these with adaptation costs heat is expected to have a substantial impact on labor from key national strategic documents. The results productivity, especially with respect to outdoor work, 301 Note that for drought, the following process had to be followed to obtain estimates usable in the macroeconomic model. First, the reduction value for yields was calculated for a maximum likelihood and for different scenarios, RCPs, periods, crops, and river basins. An average was calculated over river basins to get a national reduction value. Based then on the value of agricultural production by crops calculated by the UN’s Food and Agricultural Organization (which covered only 13 crops out of 18 crops considered by IIASA but included main crops), the estimated reduction was computed in monetary terms by scenario, RCPs, and for the period 2021–60. A hard assumption had to be considered—namely, 2021 values for agricultural production were used, as no forecasts were available. 302 This finding is consistent depending on global climate models (GCMs) considered (GFDL-ESM4, IPSL-CM6A-LR, MPI-ESM1-2-HR, MRI-ESM2-0, UKESM1-0-LL) and on findings in the ongoing World Bank Western Balkans CCDR, but it is being discussed and remains to be determined. 303 Annex 3 presents an overview of costs and benefits considered at macroeconomic level in national studies and how they relate to modeling and methodological approaches. 304 In practice, adaptation measures to address extreme heat events would consist of a package of measures, some of them going beyond the measures reflected in the modeling exercise conducted for this analysis. Such additional measures could include heat early warning systems, awareness campaigns, health system adjustments, improvement of emergency services, hotlines, and community care protocols for vulnerable groups, including the elderly. This analysis focused on measures to reduce labor productivity impacts from heat and did not account for localized or sectoral impacts, such as urban heat island effects, loss of agricultural yields, or heat-related pressures on critical infrastructure systems. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 96 which is common in the agricultural and industrial 4.5; Figure 21, left panel). When accounting for the sectors. This, in turn, will affect output, resulting in benefits of adaptation measures, our macroeconomic GDP losses of about 0.2 percent in the current model estimated a substantial reduction in heat- climate, rising to about 1.2 percent by 2050 (RCP related GDP losses (Figure 21, right panel). Figure 21. Romania: Estimated macroeconomic impact of extreme heat as a percentage of GDP without adaptation measures (left), and with adaptation measures (right) Source: World Bank. Effective adaptation measures against rising flood In sum, this case study contributes to the hazards can require substantial capital investments understanding of the macroeconomic implications of in protective infrastructure, with benefits accruing climate change in Romania and addresses gaps in in the long term. A World Bank analysis305 highlighted the information needed for national adaptation the range of factors that drive investment needs for planning. It highlights how disasters in key sectors flood protection—socioeconomic growth scenarios pose risks to the macroeconomy, affecting GDP, fiscal drive the value of assets at risk, while climate change revenues, and overall fiscal balance. Through updated scenarios drive the probability of extreme flooding risk analytics and international examples, it provides events. In addition, investment costs are influenced insights into potential measures and cost ranges for not only by local construction costs but by the level of sectoral and national planning for CCA. These can be risk tolerance of decision-makers (that is, by the further considered in building on the NAP and safety standards to which protection measures are promoting agile adaptation planning, as aligned with built). The last factor, especially, depends on local EU objectives. Finally, the study’s focus on the costs of preferences and priorities, which can shift over time, adaptation for extreme events like heat waves, implying there is no single “correct” standard. The wildfires, floods, and droughts aligns with the European World Bank’s Reimbursable Advisory Services on Union’s objectives for agile adaptation planning. flood risks in Romania examined these drivers and recommended a flood protection investment package The study does have limitations in that it relies on costing €6.9 billion for the period 2022–28 and high-level, stylized benefit-cost ratios and covering initial investment, replacement, and preliminary macroeconomic impact assessments, operation and maintenance. While these upfront underscoring the need for more comprehensive, investments are substantial, the macroeconomic tailored sectoral analytics. The findings, largely benefits in terms of avoided flooded losses would based on literature reviews and expert consultations, continue to accrue over the long term. provide only a reference range for adaptation costs, 305 Rozenberg, Julie and Marianne Fay. 2019. Beyond the gap: how countries can afford the infrastructure they need while protecting the planet. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 97 underscoring a need for more comprehensive, drought, wildfire (with broader focus than presented tailored sectoral analytics. Macroeconomic impacts here, examining not only impacts on forestry but on are also limited by the consideration of single hazards infrastructure and human health), and other climate- and the limited economic representation of impact related hazards. Such a broadened focus will refine channels and estimates. The study also highlights the understanding of investment needs and benefit-cost challenges in incorporating adaptation effectively ratios and improve the incorporation of extreme into macro models. Enhancing macro models to hazard events into macroeconomic projections. The consider extreme events and developing in-depth study advocates using a variety of models for different adaptation studies across various sectors is crucial purposes, such as macrostructural models for fiscal for a more accurate representation of damage and planning and CGE models with improved sectoral adaptation pathways. details, all while improving further the consideration of extreme hazard events. It also suggests a dynamic Continued research and development are needed in approach to adaptation, emphasizing regular macroeconomic modeling and sectoral studies to improvements and transformative actions beyond improve adaptation strategies. Future work should traditional budget and planning constraints, and focus on multi-hazard analysis of impacts on highlights methodologies that can be adapted to infrastructure and assets and on detailed studies of other European contexts. Sectoral and programmatic planning assessments of CCA costs A D D E D VA L U E A N D CO M PA R I S O N TO portfolio management for short- to medium-term E XT E R N A L N AT I O N A L A S S E S S M E N T S horizons. The study includes three case studies. Results are presented from new quantitative analytics The sectoral and programmatic assessments of for Croatia, analyzing a portfolio of selected critical climate change adaptation costs are presented here infrastructure investments; an analysis of the fictional together because, unlike with national planning, Aurelia describes the cost investment mark-up these two use cases overlap in many ways. The required for climate change adaptation and compares recommendations offered later also comprise one set the approach to analytics implemented for other for the national planning use case and a combined countries (such as the Netherlands) and purposes; set for the sectoral and programmatic use cases. and CCA costing is presented for Romania for the transportation sector, considering flood risk and For the use case from a sectoral perspective, CCA focused on road networks, with the approach costs are linked to specific sectoral planning needs compared to analytics implemented for other and the mainstreaming of adaptation across sectors countries and purposes. The case study of Sweden for short- to medium-term horizons. A deep dive is was focused on forestry and wildfires and the taken into CCA costing for the forestry sector and economic analysis of adaptation. It demonstrated an wildfire risk reduction programs in Sweden, with the approach that can be used to help prioritize and approach compared to analytics implemented for justify near-term national adaptation planning. Such other countries (Norway and the United Kingdom) and approaches will be key to the scale-up of adaptation purposes. In addition, a methodology for costing CCA in countries’ NAPs, providing an economic case for measures considering wildfire risk analytics is outlined intervention through economic appraisal. The and applied in a more detailed sectoral manner. analysis first assessed the current and possible future costs of wildfires in terms of social and economic For the use case from a programmatic perspective losses and investigated the potential of a set of (also referred to as the investment portfolio planning adaptation options to reduce those costs, along with use case), CCA costs are estimated to inform their economic costs and benefits. Importantly, the Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 98 study concentrated on the economic analysis of near- building stock, therefore, the analysis considered this term adaptation investments (in the next five years or context when retrofitting older buildings with climate so) that passed a cost-benefit test, including action to adaptive measures. This case study not only helps address current and longer-term future risks of Croatia make informed decisions and prioritize climate change, given a spectrum of projected actions, but it also demonstrates how to integrate impacts. disaster management and CCA in a practical manner. Furthermore, it can serve as a model for other In the scenario presented in its case study, the countries facing similar challenges, facilitating the hypothetical country of Aurelia uses one of the implementation of CCA strategies at the national and many government planning options for climate- EU levels. proofing its critical infrastructure and buildings. It engages in a process to evaluate the level of safety The case study of Romania, already discussed and adaptation required for climate-proofing based above with respect to wildfire and extreme heat on multiple criteria, applying guidelines and lessons from a national planning perspective, presented a from other countries. The results of the analysis tend strong economic case for integrating climate change to show a positive correlation between the level of adaptation measures into network infrastructure, ambition in reducing residual damage and the cost of where damage can quickly spread and multiply. To investments. Climate forecasting based on RCP 8.5 assess the flood exposure of Romania’s transportation scenarios and analysis could be used to determine network, a spatial network criticality analysis was the appropriate design and retrofit specifications for conducted, which demonstrated that even localized critical infrastructure and buildings. Benefit-cost flood events can result in countrywide impacts on analysis and effectiveness analysis were used to agricultural supply chain flows. Considering such ensure investments would make economic sense, indirect impact propagation is essential for evaluating and co-benefits of the functionality of assets were the impacts of climate shocks on infrastructure considered within 20- to 50-year time horizons. The networks and on the households and firms dependent case study assessed such strategies as passive on them. Accounting for them through criticality survivability for buildings, multicriteria and criticality analyses can help determine the benefits of analyses for transportation and power networks, and adaptation investments more comprehensively, multi-hazard climate-proofing for education, health, yielding more meaningful investment appraisals. and civil protection infrastructure. While the scope of this illustrative case study was limited in terms of sectors and hazards, it The case study of Croatia is complementary to the demonstrated the value of this approach. The findings Aurelia case study, as it serves to provide example also highlighted the need for adaptation measures to of how to address climate-proofing of critical approach infrastructure systems as interconnected infrastructure assets in the civil protection sector. In networks and require complementary actions to this case study, a portfolio assessment was conducted ensure adequate financing (including for for Croatia’s critical civil protection infrastructure infrastructure maintenance); standards for risk- served as a starting point for an analysis of CCA informed planning; and well-defined roles, measures and the strengthening of critical responsibilities, and institutions to ensure resilient infrastructure. The analysis identified climate-related infrastructure. risks and impacts to critical infrastructure, as well as determining CCA measures and cost ranges to When costing CCA, it is crucial to consider the prioritize risk reduction and preparedness difference in methodologies for assessing current investments at the sectoral level. The analysis also and future climate risks and impacts. Current considered a single hazard approach, estimating the impacts are often assessed based on historical data, cost of improving the resilience to heat of existing producing risk and vulnerability maps and identifying buildings in Croatia, estimating the marginal costs. high-risk areas or assets. A risk assessment project in Croatia, like many countries in the EU, has an older the western Balkans, for instance, sought to identify Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 99 the robustness of potential engineering and non- need for adaptation to reduce the risks of future engineering interventions by analyzing multi-hazard climate change is clear. From an economic risks for the current climate and the resilience of the perspective, however, justifying such investment trade and transportation networks.306 The now, especially in proactive adaptation, is often interventions were then organized into portfolios to difficult for several reasons. First, the impacts of reduce disaster risks, with estimated costs ranging climate change, and thus the benefits of adaptation, from US$15 million to $60 million (€14.20 primarily arise in the future, which makes it difficult to million–€151.46 million). justify in economic terms the upfront costs today. Second, uncertainty about future climate change is Also essential to any assessment regarding future high, which makes it difficult to make optimal climate is to take into account the spectrum of decisions. To address these barriers to investing in projected impacts and consider multiple possible early adaptation, this scoping study of Sweden scenarios under different temperature and demonstrates a framework that is already being meteorological projections. When assessing future applied in economic analysis of adaptation in flood risks, for instance, return periods have to be Europe.308 aligned with precipitation projections under different climate change scenarios to determine potential The study investigates how to advance the costing impacts. An assessment of global road and railway of adaptation investments and the use of economic infrastructure considering flood and multi-hazard analysis to prioritize adaptation options, presenting risks, for example, reveals that enhancing flood the example of wildfire adaptation. The analysis first protection and adaptation would yield positive returns assesses the current and future costs of wildfires in on 60 percent of the roads exposed to a 100-year terms of overall economic costs in Sweden, including return period flood event.307 Consideration of the social and environmental impacts. It then range of projected climate impacts is especially demonstrates how to sequence and prioritize important when assessing long-term impacts and the adaptation options, providing an economic rationale. benefits of adaptation. Additional factors that need to The objective is to show how line ministries (of be considered include the presence of multiple sectors) and civil protection agencies can use hazards and potential compounding effects, changes economic analysis to support early adaptation in socioeconomic conditions,and the interdependency planning and decisions. of critical infrastructure networks. Current and future wildfire risks in Sweden NEW ASSESSMENTS AND LESSONS LEARNED Wildfires are uncontrolled vegetation fires. While they Sweden: Example of adaptation costing and require an ignition source, and most arise from some economic analysis for wildfire in the forestry form of human activity, they also depend on land use sector and the presence of combustible material. Temperature and other climate variables are factors in wildfire While a strong scientific case can be made for early incidence and extent, both in terms of the average adaptation, justifying adaptation from an economic climate and of climate variability and weather and perspective is often more difficult, and this will be a climate extremes. A wide range of indicators used in priority for allocating resources in national plans fire danger or weather indices for early warning for and programs. From a scientific perspective, the wildfire usually involve consideration of temperature, 306 Green, M. et al. 2020. Diagnosing Vulnerability and Economic Resilience of transport Systems, Infrastructure and Operations in the Western Balkans (DIVERSION). Wood Environment & Infrastructure Solutions UK Limited for the WB. 307 Koks, E.E. et al. 2019. A global multi-hazard risk analysis of road and railway infrastructure assets. Link. 308 Watkiss, P. and Betts, R. A. 2021. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 100 relative humidity, windspeed, rainfall, and potential provided.312 This study estimated the costs of wildfires evaporation, as well as drought indices.309 Studies that in 2018 at €512 million, incurred from firefighting have assessed the spatial and temporal patterns of and suppression, the loss of timber, and added air forest fire activity in Sweden and their association with pollution and carbon emissions. These economic climatic indices find dry conditions and droughts are costs could be used to assess the economic case for the most important factors, although the patterns vary early adaptation. across the country.310 Climate change has the potential to increase wildfire The current economic costs of forest wildfires in risks, although uncertainty over the projections is Sweden are significant. Although the wildfire impacts high.313 Northern Europe and, especially, the Arctic Sweden has experienced have not been high are already warming at a much faster rate than the compared to other European countries, the global average, a trend projected to continue.314 The associated economic losses are still important. From picture for Sweden is more complex than in many 2000 to 2021, Sweden had more than 105,000 other parts of Europe, however, particularly in terms wildfires, leading to a burnt area of a reported 74,148 of precipitation. While rainfall in Sweden may increase hectares (ha) of land.311 To date, most analysis has on average, the increase is primarily driven by more focused on the direct costs of these events, including rain in the north and during the winter. Year to year the costs of suppression as well as the damage and variability and the frequency and intensity of dry loss incurred. These events also impose social and spells and droughts may also change.315 Most studies environmental costs, however, such as those from project an increase for the country in average wildfire carbon and air pollution. This study valued the overall risk from climate change,316 as well as increased risk economic costs of wildfires in Sweden and estimated of major wildfire extreme seasons, as in 2018.317 them, on average, at €66.7 million per year. These Analysis of projected modeled changes indicate the are much higher in major wildfire years, such as 2014 average annual risk could be one and a half to two and, especially, 2018, when more than 8,000 fires times higher by mid-century, and that the frequency were recorded, affecting more than 20,000 ha of of extreme seasons could double in likelihood—(with productive forest area, and international support was a range of one and a half to three times more) by mid- 309 Arnell, N.W., Freeman, A. and Gazzard, R., 2021. The effect of climate change on indicators of fire danger in the UK. Environmental Research Letters, 16(4), p.044027. Link. 310 Igor Drobyshev, Mats Niklasson, Hans W. Linderholm. 2012. Forest fire activity in Sweden: Climatic controls and geographical patterns in 20th century, Agricultural and Forest Meteorology, Volumes 154–155, 2012. Link.; Droughts and wildfires in Sweden past variation and future projection (2017). Research project funded by the Swedish Civil Contingencies Agency (Myndigheten för samhällsskydd och beredskap: MSB). 311 EFFIS. Annual Fire Reports. Link. Note that EFFIS reports only on wildfires of a certain size and relies on nationally reported results, which vary by country. According to the MSB, the number includes 14,200 fires in productive forest (with 51,200 ha land burned), 38,700 fires in other tree covered area (with 9600 ha land burnt). And 53,500 fires in land without trees (with 13,000 ha land burnt). Fires smaller than 1m2 are not included and in some fire events, more than one type of land was affected. Therefore, there are more total number of fires than for the land type affected by the individual fires. 312 San-Miguel-Ayanz, J. et al. 2019. Forest Fires in Europe, Middle East and North Africa 2018. Publications Office of the European Union, Luxembourg. doi:10.2760/1128, JRC117883. Link. 313 Note that this report mostly focuses on wildfire hazard with factors linked to climate change and weather rather than other important factors affecting wildfire risk such as vegetation, changes in forestry practices, and human influences affecting ignition. 314 Rantanen et al. 2022. The Arctic has warmed nearly four times faster than the globe since 1979. Commun Earth Environ 3, 168. Link. Lee et al. 2021: Future Global Climate: Scenario-Based Projections and NearTerm Information. In Climate Change 2021: The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 553–672.Link. Eklund, A. et al. 2015. Sweden’s future climate. Link. 315 Eklund et al (2015). Sweden’s future climate. Link.; Skogsstyrelsen. 2020. Klimatanpassning av skogen och skogsbruket – mål och förslag på åtgärder. RAPPORT 2019/23. Link.; SMHI (2023). Future climate. Link. 316 Igor Drobyshev, Mats Niklasson, Hans W. Linderholm. 2012. Forest fire activity in Sweden: Climatic controls and geographical patterns in 20th century, Agricultural and Forest Meteorology, Volumes 154–155, 2012. Link.; San-Miguel-Ayanz, J. et al. 2022. Forest Fires in Europe, Middle East and North Africa 2021. Publications Office of the EU, JRC130846. Link.; Swedish Civil Contingencies Agency. 2017. Droughts and wildfires in Sweden. Link.; Fabbro et al. 2020. Future projections of forest fires in Sweden. Department of Earth Sciences NG0220 Climate Change and Society Report. Link.; Hurst. 2021. The Susceptibility of the Circumpolar North to Zombie Wildfire: An Exploratory Case Study of Sweden. Link. 317 Krikken, F. et al. 2019. Attribution of the role of climate change in the forest fires in Sweden 2018. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 101 century. While these projections support a strong scenarios. Starting to prepare for these risks as an case for scaling up adaptation to wildfire, it must take initial adaptation step and identifying early actions uncertainty into account. that could improve future decisions is therefore valuable. To explore their potential importance, this Because forestry has long lifetimes and involves study developed storylines for these two new climate lock-in, decisions made for the sector in the next risks, including indicative analysis of economic costs. decade will influence the risk from climate change The analysis highlighted early research and planning for decades to come. While practices vary in Sweden, as part of an adaptation pathway approach to the use of a long forest management cycle is preparing for risks proactively. widespread. This is important because forestry investments made in the next ten years will be exposed to the changes in climate over the next fifty Building blocks and analytics for adaptation or more, resulting in a degree of lock-in and path economics dependency for immediate and near-term decisions that highlights the need to mainstream climate Sweden is developing adaptation plans for forestry adaptation in near-term investment and planning, but lacks costed estimates and economic analysis. although this involves decisions under uncertainty. It Sweden recently refined its fire risk model based on is also noted that achieving the Swedish net zero goal the Canadian Fire Weather Index System,319 and the (to achieve zero net emissions of greenhouse gases Swedish Forest Agency has published an adaptation into the atmosphere by 2045) will mean that GHG plan designed specifically for the forestry sector, emissions should be at least 85% lower than in 1990, covering all risks, including wildfires.320 While the with the remaining 15% reduction achieved through plan identifies the importance of estimating the costs supplementary measures (for emissions that are very and benefits of climate adaptation and selecting difficult to reduce). The Swedish policy statement for adaptation measures that are cost-effective, it also net zero318 sets out that these supplementary acknowledges that existing assessments and cost measures include increased carbon sequestration in estimates are limited and need to be improved. This forest and land, carbon capture and storage case study addresses this gap, focusing on an technologies (CCS) and emission reduction efforts approach to prioritizing and sequencing early outside of Sweden. This means that new forest or adaptation. It illustrates how analysis could be woodland areas might be part of the mix to support undertaken to support national strategies and NAP net zero goals and any new areas would need to be investments for near-term plans. designed with the future climate in mind. Given the increasing risks and impacts of wildfire, Additional wildfire-related risks from climate three types of early adaptation investments— change could be significant in coming decades. referred to here as building blocks—are proposed Climate change could produce major risks for Sweden that can be justified in economic terms, with the that have not been experienced to date. These objective of enhancing climate and wildfire include new risks associated with peatland wildfires, resilience. Other national assessments in Europe as well as indirect changes to wildfire risk following have used an economic rationale to build up the case pest and disease outbreaks in forests. While these for early adaptation.321 This analysis looks at these are not considered serious problems in Sweden three areas of investment in the forestry sector to today, they are already significant in other European address the current and future climate risks identified countries, and they may become important in Sweden above: by mid-century, especially under higher warming 318 Government of Sweden. 2022. Sweden’s climate policy framework. Link. 319 San-Miguel-Ayanz, J. et al. 2022. Forest Fires in Europe, Middle East and North Africa 2021. 320 Skogsstyrelsen. 2020. Klimatanpassning av skogen och skogsbruket – mål och förslag på åtgärder. RAPPORT 2019/23. Link. 321 Watkiss, P. and Betts, R. A. 2021. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 102 • The first building block involves no-regret options • To explore this set of options, the study considered that can reduce current economic costs of wildfires a forest wildfire capacity-building, awareness- today and can be justified in cost-benefit terms and raising, and training program, building on a implemented immediately, reducing current losses recommendation in Sweden’s sectoral adaptation and building resilience for future and rising risks. plan for forestry322 that targets Swedish fire­ fighters, incident commanders, and private forest • The second building block looks at the opportunity owners, especially those in the southern part of to integrate adaptation into early investment the country.  The costs of such a program, based decisions that will be made anyway over the next on a 10-year period, were estimated at €70 million, five to ten years to reduce lock-in risks. This or €6.9 million per year.  recognizes that if irreversible investments are going to happen in the short term, it makes sense • An analysis of the economic benefits of this program to ensure they are climate-resilient. in terms of reducing the number of wildfires and burnt area estimated the cost at €129 million per • The final building block identifies early low-cost year over the next 15 years, even for the current actions that could be implemented today to start climate. preparing for longer-term risks and can be justified based on the future option value and improved • A cost-benefit analysis found this option could have future decisions. This provides an example of a positive benefit-cost ratio of 2 to 1—that is, the sequencing and prioritizing adaptation based on benefits would outweigh the costs even today. The the urgency of decisions and the economic benefits ratio would increase with the changing climate to 3 delivered. to 1, assuming increased wildfire risk with early climate change. The large nonmarket benefits These three types of investments are not mutually determined would justify public sector investment. exclusive, and a combination of all three is often needed as part of a portfolio at the national level. • This approach could be used to assess a wider set The process conducted here demonstrates a re- of no-regret options, both those proposed in the plicable approach for building a portfolio of early recent Swedish sectoral adaptation plan for adaptation options that can serve as a blueprint for forestry and others included in a more detailed other national assessments. The analysis of the appraisal. For example, this could include options and its results are summarized below. programmes to raise awareness and support prevention among the public, or it could target For early no-regret adaptation, the study analyzed specific actors, such as forest entrepreneurs. To the option of wildfire prevention training and an support this kind of action, further , it would be awareness-raising program:  useful to further investigate the effectiveness of potential non-technical options, through a • The study purposed a set of “no-regret” adaptation combination of detailed review, feasibility studies options may be good to introduce now, based on and expert consultation. their potential to reduce the current economic costs of forest wildfires. They tend to be low-cost For integrating adaptation in near-term investment nontechnical options, such as wildfire early warning decisions for forestry, the study analyzed the systems, awareness raising, and training programs, options of climate-proofing forests and creating among others. woodlands to support the net-zero target: 322 After the 2014 wildfire seasons, a few training programs and prevention measures have been in place by the MSB and the Swedish Forest Agency to enhance wildfire prevention and response, such as web-based training module for firefighters and voluntary forest fire forces. After the 2018 wildfire season, investigations were carried out that led to the establishment of new laws for the municipal rescue service to enhance wildfire response and collaboration. Nevertheless, currently there is still a lack of a more qualified combined training/practice to manage extensive and complex forest fires and to also use special analysis teams for forest fires. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 103 • Given their very long lifetimes, reducing the lock-in of wildfire management planning to put a process risk associated with new investments in Sweden’s in place to address the change in risk over time and forestry sector could be beneficial today. These to allow for scale-up as evidence of wildfire risks options can ensure that new planting (whether as improves. part of ongoing silviculture management cycles and replanting or for carbon sequestration for net- • While the case study focused initially on new areas zero) takes account of future wildfire risks. for carbon sequestration, similar actions could also be considered in terms of the general replanting • These decisions are complex because of future and regeneration cycle for Swedish forests. Tackling uncertainty. The options, costs, and benefits of all forest replanting would represent a much climate-proofing new forests or replanting can vary greater scale-up. Pilot studies on climate-proofing not only with a 2˚C, 3˚C, or warmer future world but new forest investment would be advisable to obtain with whether the future climate is wetter or drier. real-world information on options, costs and Decisions, therefore, must be made under benefits, while taking the first steps toward uncertainty. They can take account of future integrating climate-proofing requirements into uncertainty, by, for example, considering options national policy and processes. that are more robust to alternative futures or that introduce flexibility or allow scaling up later as For early preparation to address future major risks, evidence emerges. the study analyzed bark beetle surveillance and peatland wildfire prevention programmes: • To explore this, the study investigated options to introduce adaptive management planning in new • The final area of analysis was future uncertain but forest or woodland creation, using the example of potentially large climate risks and what early actions new forest or woodland areas. Among options that might be beneficial today to address risks that could be introduced in these new areas are wildfire might emerge in coming decades. risk management plans, wildfire prevention, reduced tree density, and mixed species for wildfire • Early adaptation can be justified for addressing reduction. even long-term (and uncertain) risks, as part of iterative adaptative management approaches, or • The analysis suggests that for new investments this adaptation pathways. Early actions can be decade, low-cost wildfire management plans and worthwhile to invest in today, in terms of the option some early prevention measures might already value they provide and their ability to improve make economic sense. Based on the central future decisions, resulting in improved future projections of the future climate, they could reduce benefits and reduced future costs. future lock-in risk to climate change with a benefit- cost ratio of 1.2 to 1 even today. More extensive • To explore this, the study considered two potential actions for wildfire management, however, major new risks for wildfire in Sweden, using story­ including extensive firebreaks, lower-density lines. The first looked at the northward climatic spacing, and mixed species, had a benefit-cost suitability for bark beetle infestations and the higher ratio below 1 in this decade.323 Additional beneficial wildfire risks that might follow major outbreaks due early actions could come from flexible, early to. The second investigated peatland wildfires and measures that allow future scale-up—for example, the very large carbon emissions these could emit. In designing new plantations to make it easier to both cases, early actions would involve taking the introduce firebreaks later. Furthermore, the first steps in preparing for adaptation. analysis highlighted the need for an iterative cycle 323 Note that this calculation is with respect to wildfire benefits only. These options do have additional climate and other ecosystem service benefits. They might also be valid for new planting in future decades if, for example, stronger wildfire risks emerge. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 104 • The analysis of bark beetle surveillance assessed would be moderate (less than €10 million per year). the economic costs of increased pest and disease They encompass actions, mostly in the next five outbreaks, with a focus on the bark beetle and the years, that can be justified in economic terms, indirect impact these outbreaks might have on delivering immediate benefits several times the costs wildfire risk (due to changes in leaf cover, fuel load, and future benefits. The analysis also provided useful and from tree mortality, though the changes on insights into the timing and sequencing of adaptation overall wildfire risk are uncertain324). The study options. looked in particular at the value of information that would be provided by enhanced monitoring in terms, first, of the potential for improved information Takeaways from Sweden to reduce current and near future losses by improving decisions to tackle outbreaks and, The approach taken by the Sweden case study second, the potential to use this information in highlights the economic benefit that may derive decisions on new investments in the forestry sector, from investing in various types of adaptation today, such as whether to invest now or later. Low even in the face of uncertainties about future investment in monitoring was found to provide a climate impacts. The study showed how countries positive economic return. The analysis also can use economic analysis to help sequence and highlighted the potential benefits of a research prioritize adaptation measures for sectoral or national program in bark beetle and wildfire linkages, again planning. Key takeaway points are summarized based on the value of the information this would below. provide for future policy. It is useful to start with the current, then look to the • The analysis of peatland wildfire prevention looked future, as part of an adaptive management at the potential economic costs of peatland framework. Countries like Sweden, once considered wildfires, using analogues from other northern low-risk, now face increased wildfire threats because European countries. It found that these risks could of climate change, at least in some areas of the be important for Sweden, and that an early country , but adaptation investments can be difficult programme of investigation would be justified. The to justify in these formerly low-risk areas. An important analysis also identified the costs of early activities starting point is to establish current economic costs that could be implemented as part of adaptive before considering future risks. management to support future adaptation decisions. The analysis provided an economic case for some early adaptation actions, but not all were justified in • Both of these examples showed how, even for more the Swedish context. The analysis drew on uncertain future risks, early, low-cost steps of international literature, looking at adaptation options adaptation could make sense as part of adaptative in other countries with existing wildfire risks. While management strategies. some interventions could be justified for early action in Sweden, this was not the case for all. This finding In sum, considered together, the three building highlights the value of economic analysis in helping blocks of investment can provide an adaptation to prioritize and sequence adaptation actions. It also portfolio that will deliver immediate economic highlights the benefits of further research, especially returns, reduce risks in near-term investments with on the likelihood of wildfire risks, and the transferability lock-in, and support some early actions to start the of adaptation options to the Swedish context, to help process of adapting to long-term major risks. improve future decisions and actions. The additional costs of this package of measures 324 Hicke, J. et al. 2012. Effects of bark beetle-caused tree mortality on wildfire. Forest Ecology and Management, Volume 271, 1 May 2012, Pages 81-90. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 105 By focusing on the three building blocks for early The example of early economic analysis provided adaptation, a strong economic case for action could for Sweden could be relevant for other countries in be constructed. The analysis showed it is possible to Europe, as well. Few go further than to consider the identify and justify immediate no-regret actions, like costs of adaptation, look at the economic benefits, capacity-building and awareness campaigns, that and assess them in benefit-cost analysis terms. In the also deliver benefits in the short term. Potential lock- specific area of wildfire, this approach could be in risks could also be identified and addressed translated to other countries. Box 9, for example, through climate-smart thinking in near-term outlines how follow-up studies could apply this investments, while noting the need to consider analysis to Portugal or Romania. It should be noted uncertainty. Finally, the analysis showed the that while this type of analysis can serve as an initial importance of identifying and taking the initial actions scoping study, the making of a detailed investment to address longer-term major risks, even if uncertain, plan (such as for a spending or budget submission) generating information as part of an iterative would benefit from a more detailed analysis requiring approach that can be applied in subsequent more information, data, and technical decision- decisions. making. For Sweden, more than 15 data sources (international, national, and regional) were available, The use of the approach presented here to estimate as were more than 150 reports and various forms of the economic costs of adaptation for forest wildfire grey literature that reviewed and modeled results demonstrates its application. It is stressed, though, with projections for future climate. For studies of that comprehensive dialogues involving all climate change risks in other countries and sectors, stakeholders, including private forest landowners, such a knowledge base would have to be developed are crucial for taking such approaches forward in by the researcher. practice. BOX 9. PORTUGAL AND ROMANIA: HYPOTHETICAL APPLICATIONS OF THE METHODOLOGY USED FOR SWEDEN The methodology used in the study of Sweden could be from increasing climate change effects. applied to other European countries, with the countries’ specific climate and wildfire context considered. If applied to Romania, the analysis could consider the country’s unique wildfire context. Wildfires in Romania Several considerations are important when undertaking have historically had lower impacts than other hazards but this analysis for Portugal. Existing programs, such as Safe have been more likely to occur.325 The analysis could make People and Safe Villages, and legislation for wildfire safety use of existing data, although they are less robust than for should be included in the assessment of current and future other countries. The development of scenarios and risks, as should the costs and benefits of immediate and storylines for the future would benefit from detailed climate longer-term interventions. Rural exodus, fuel management, risk analytics using information on historical losses and and other social dynamics also need to be considered in climate projections. Romania’s high proportion of Natura allocating resources to wildfire emergency management. 2000 protected areas and diversity of forest types, among Since peatland is localized to limited areas in the mountains other sectoral characteristics, would have to be considered of northern Portugal and in the central region, risk reduction to assess losses and develop adaptation measures. for future wildfires could be combined with cross-border Adaptation measures could also be selected based on collaboration for resilience measures. Forestry adaptation Romania’s current NAP and complementarity in terms of could also focus on areas of rural Portugal where, although assessing benefits and costs and adjusted based on the the population is shrinking, forest and wildfire management current state of fire prevention and forest management. are crucial to efforts to avoid catastrophic wildfires resulting 325 EC. 2021e. JRC Technical Report on Forest Fires in Europe, Middle East and North Africa 2020. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 106 In general, countries could (and will probably need research project ToPDAd (Tool-supported policy to) make more use of economic analysis to help development for regional adaptation) has shown the them sequence and prioritize options in national vulnerability and reduced generation capacities of adaptation planning. Pressure to demonstrate the European countries’ energy systems as a result of value for money of adaptation will be greater than for temperature rise, increased rainfall and storms, and other priorities, and economic analysis provides a sea-level rise, especially in Central and Eastern way of doing this. Europe.327 Such loss, however, can be greatly reduced with adaptation measures, such as implementing Finally, cross-sectoral and multi-stakeholder smart grids and upgrading the cooling system. dialogues are key to this analysis. Given the complexity of the topic and associated decision- The analysis for Aurelia sought to evaluate the level making, such dialogues are needed to inform of safety and adaptation required and/or desired for comprehensive studies of climate change, particularly climate-proofing buildings based on multiple among relevant ministries, organizations, and civil criteria, following best practices outlined in protection agencies, as well as research institutes guidelines and the literature and from other and private entities. countries.328 It considered whether to protect the country’s buildings to a constant relative risk level or to maintain a constant absolute risk level (see Chapter The fictional case study of “Aurelia”: Climate- 1), a decision that depended on the assets at stake proofing selected critical infrastructure assets and information from historical disaster impacts, climate projections, existing exposure and In this hypothetical case study, the fictional country vulnerability studies, criticality and redundancy of Aurelia is interested in investigating and criteria, stakeholder consultation, benefit-cost evaluating investments needed for climate proofing analysis, and concepts related to the passive various types of critical infrastructure, including survivability of buildings (see below). As the analysis power and transportation networks, education and included multiple hazards, the adaptation objectives health infrastructure, and civil protection for a given of type of asset depended not only on infrastructure. Critical infrastructure networks serve these factors but on the applicable legislation and important functions in society but are vulnerable to standards in the country. Horizons of 20 to 50 years climate hazards, such as floods and extreme heat were considered for the infrastructure, depending on waves etc. In the real world, the results from the whether retrofitting or new construction were to be COACCH assessment suggested that, under RCP 4.5 involved; hence, the study focused on climate and 8.5 climate scenarios, the expected annual projections for the 2050s and 2070s. The damage (EAD) to road infrastructure from river flooding obsolescence rates of infrastructural assets and would be an estimated €920 million for the EU-27 and replacement versus repair strategies were taken into €1.4 billion for the United Kingdom.326 The EU-funded account, as were national strategies concerning the 326 Lincke, D. et al. 2018. Link. 327 Tool-supported policy development for regional adaptation (ToPDAd). 2015. Securing the EU’s Energy Future - Adapting our energy system to climate change. Link. 328 Climate-ADAPT. 2023. EU-level technical guidance on adapting buildings to climate change. Link. Climate-ADAPT. 2023. Technical Report. Link.; Climate-ADAPT. 2023. Best Practice Guide Link.; EC. 2021. Commission Notice — Technical guidance on the climate proofing of infrastructure in the period 2021-2027. Link.; Institute for European Environmental Policy (IEEP). 2012. Methodologies For Climate Proofing Investments And Measures Under Cohesion And Regional Policy And The Common Agricultural Policy - Final Report. Link.; European Commission. 2018. Climate change adaptation of major infrastructure projects - A stock-taking of available resources to assist the development of climate resilient infrastructure. Link.; Hallegatte, S. 2019. Link.; Miyamoto International, Inc. 2021. Overview of Engineering Options for Increasing Infrastructure Resilience in the Caribbean: 360° Resilience Background Paper. Link.; World Bank. 2019. Overview of Engineering Options for Increasing Infrastructure Resilience - Final Report. Link.; UNDP. 2011. Paving the way for climate-resilient infrastructure: guidance for practitioners and planners. Link.; Asian Development Bank. 2011. Guidelines for Climate Proofing Investment in the Transport Sector Road Infrastructure Projects. Link.; OECD. 2023b. Taming wildfires in the context of climate change. Link.; OECD. 2023a. Adapting policies and practices to extreme wildfires: a cross-country review. Link.; Lynch et al. 2019. Fighting Wildfires with Innovation, Insurance Information Institute. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 107 percentage of stock retrofitted over a specified time supposed to be insufficient on building vulnerability horizon—for example, five to ten years—as well as and effective measures particular to Aurelia, so this assumptions around supply chain and labor would be subject to an additional one-year research availability. National initiatives around retrofitting program, building on recent outputs from wildfire risk were embedded in the analysis, and the costing analytics for current and future climate, to be exercise considered marginal costs in the provision of supported by the Ministry of Environment, overseeing new or the rehabilitation of existing infrastructure the implementation of the NAP. For other hazards, (see case study on Bulgaria). such as landslides, storms, and sea-level rise, vulnerability was considered on a case-by-case basis, The adaptation ambitions and objectives considered as exposure analytics showed only a small proportion for Aurelia depended on the hazard and type of of buildings in areas with medium to high hazard, asset examined. In general, a positive correlation subject to further refinement of the data. For all major tends to occur between the level of ambition in terms investments, a benefit-cost analysis was undertaken of reducing potential residual damage—that is, the to determine whether they made economic sense. effectiveness of the investments—and their cost (see Some nonmarket valuation needed to be improved, Chapter 1). Climate forecasting and analysis, as well however, so the research project covered this, as well. as information from engineers about building For all analytics, the spectrum of projected climate vulnerability and adaptation options, can be used to impacts and other estimates were transparently determine effectiveness to produce specifications for outlined, and sensitivity analysis was conducted with retrofitting or design. Furthermore, this information different key parameters. can support the prioritization of investment.329 The benefits of climate-proofing might be considered in “Passive survivability” is defined as maintaining terms of damage to property avoided (for example, livable conditions in the event of extended loss of destruction of buildings), economic activity not power or shortage of heating fuel. When a power forgone as a result of damage (electrical outages, outage or interruption in fuel supply occurs, most failed bridges), avoided effects on health and human mechanical heating and cooling can no longer operate. life or impacts on environmental services (erosion, The aim of passive survivability is to be prepared in any loss of natural capital for climate resilience), and so such an event to maintain safe indoor temperatures on. These impacts can be more or less straightforward and, where possible, potable water. Examples from the to monetize, and nonmarket valuation may be use case considered in the analysis included options required for benefits not observable through market and paths to be followed to achieve passive survivability transactions and pricing. Generally, the aim for for newly constructed buildings.330 Aurelia was to achieve a constant relative risk level or maintain a constant absolute risk level. This meant For transportation and power networks, detailed concretely that, terms of flood risk, the analysis would vulnerability studies and multicriteria analysis were consider the protection of buildings against a conducted to inform the selection of CCA measures specified return-period event as a building standard to be costed. Experts in Aurelia undertook detailed in the country but in terms of heat would consider criticality assessments and considered plausible rising average temperature, according to RCP 8.5 future hazards with large cascading effects that could scenarios, and robustness against some extreme affect these assets. A risk analysis involving heat wave events. It was also necessary to consider determination of network vulnerability, criticality, and the variation in return-period levels as a function of risk assessment under current climate was done for climate change effects. In terms of wildfires, some transportation networks to identify high-risk locations measures were considered, but information was and prioritize adaptation interventions. For power 329 WB and EC. 2024. From Data to Decisions: Tools for Making Smart Investments in Prevention and Preparedness. 330 United States Green Building Council. 2023. Passive survivability and back-up power during disruptions. Energy and Environmental Design credits. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 108 networks, an integrated approach included risk buildings. Examples are outlined in Table 19 in analytics and impact scenarios to examine current Annex 3. and future climate impacts, with the interdependent cascading effects between power infrastructures The measures mentioned above were then costed taken into account. A long list of climate adaptation based on assessments by local engineers, measures was considered, based on local and considering national standards and international international experience (see also Table 5 in Annex 1 experience. Although these assessments are and Table 17 and Table 18 in Annex 3).331 ongoing, an idea of the ranges of mark-up costs could be obtained from the literature and other country The final selection and costing of measures are assessments (including Bulgaria; see previous ongoing. In addition, the government of Aurelia is section). Costs of selected measures to retrofit health engaged in a multi-stakeholder dialogue with, first, buildings for heat protection can be found in Box 10 industry stakeholders, as investment in power and potential costs of selected measures for networks is often also led by the private sector, and fireproofing buildings in Box 11. there is potential during decarbonization to invest in both greener and resilient renewable energy;332 and, Other relevant examples of CCA costs from the second, the general public, as tools are now available literature include the following: to assess vulnerability at building level across Europe that could be used to provide better information.333 • Residential building resilience against extreme heat (United States). Implementation of cool roofs: For education, health, and civil protection US$0.75–$3 (€0.70–€2.79) per square foot335 infrastructure, resilience against heat was prioritized, with proofing against other hazards to • Residential building resilience against wildfire be done on a case-by-case basis. The assessment (United States). Fireproof retrofitting of roofs: followed a portfolio-based prioritization of buildings US$22,010 (€20,574) per house336 requiring interventions based on risk analytics, socioeconomic considerations, and the functionality • Residential building resilience against wildfire of buildings and their importance in the network (United States). Fireproof retrofitting of external (including acting as emergency hubs and shelters). walls (including windows and doors): US$40,750 As with transportation and power networks, a long (€38,092) per house337 list of climate adaptation measures was considered based on local and international experience (see • Education facility resilience against extreme heat also the Bulgaria case study in the previous section),334 (Italy). Establishment of green schoolyards or including measures for the passive survivability of gardens: €160–€300 per square meter338 331 IEEP. 2012. Link.; World Bank. 2019. Overview of Engineering Options for Increasing Infrastructure Resilience - Final Report. Link; Interreg Adriadapt. 2022. Adaptation of transport infrastructure and services. Link.; Climate-ADAPT. 2023a. Adaptation options for hydropower plants. Link; European Commission. 2018. Climate change adaptation of major infrastructure projects - A stock-taking of available resources to assist the development of climate resilient infrastructure. Link.; 332 World Bank. 2019. Overview of Engineering Options for Increasing Infrastructure Resilience - Final Report. Link.; Deloitte Insights. 2022. Carbon- proofing the grid: increasing renewables and resilience. Link. 333 R4RE. Resilience for real estate. Link. - only for heat outside of France. 334 USHHS 2014. Primary protection: enhancing health care resilience for a changing climate. Link.; Boston Planning and Development Agency. 2005. Link.; Wisconsin. 2023. Flood prevention: steps that can save your life and property. Link.; C40. 2016. C40 Good practice guide: climate change adaptation in Delta cities. Rotterdam climate change adaptation strategy. Link. and blog; Stanford. 2023. Climate resilient California schools. Link; Miyamoto International, Inc. 2021. Overview of Engineering Options for Increasing Infrastructure Resilience in the Caribbean: 360° Resilience Background Paper. Link.; Miyamoto International. 2019. Link. Background Paper for this report, WB, Washington, DC; Miyamoto International. 2019. Link. Technical annex to background paper; Report for the Caribbean: ; ClimateAdapt. 2023. EU-level technical guidance on adapting buildings to climate change. Link. Technical report Link. and best practice guide Link.; Asian Infrastructure Investment Bank. 2022. Investing in Climate-Resilient Roads for a Better Tomorrow. Link. 335 US Environmental Protection Agency. 2022. Using Cool Roofs to Reduce Heat Islands. Link. 336 Headwaters Economics. 2018. Building a Wildfire-Resistant Home: Codes and Costs. Link. 337 Headwaters Economics. 2018. Link. 338 Di Pirro, Elena, Peter Roebeling, Lorenzo Sallustio, Marco Marchetti, and Bruno Lasserre. 2023. “Cost-Effectiveness of Nature-Based Solutions under Different Implementation Scenarios: A National Perspective for Italian Urban Areas” Land 12, no. 3: 603. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 109 • Transportation network resilience against extreme • Power network resilience against floods (six EU temperature and weather events (EU Member Member States). Increase in dam height of States). Adaptation of roads and tracks to higher hydropower stations: €16 billion per year341 temperatures or increased precipitation: €30 million–€8.9 billion per year339 • Power network resilience against extreme heat (EU Member States). Additional cooling of thermal • Power network resilience against multiple hazards power plants: €640 million per year342 (EU Member States). Adaptation of electricity grids: €640 million–€650 million per year340 BOX 10. HEAT RESILIENCE IMPROVEMENTS TO EXISTING HEALTH CARE FACILITIES IN AURELIA Estimation of the cost of heat resilience improvements to were then used to estimate the size of investment required existing health care facilities in the fictional country of to upgrade health facilities in Aurelia. For the purpose of the Aurelia, considering marginal costs, was based on the case study, the average size of a health care facility in literature. The comprehensive study, “Risks to Productivity Aurelia was assumed as 5,000 square meters. The costs in Hospital Settings from Heat-Induced Health and Well- per facility of the four adaptation options were as follows: Being Impacts,” published by Frontier Economics in 2022,343 analyzed the costs associated with climate change • Option 1: €2.38 million adaptation measures in 248 National Health Service • Option 2: €2.88 million hospitals in England. The four retrofitting measures • Option 3: €3.92 million considered for an existing medium-rise courtyard-type • Option 4: €4.44 million facility, with their estimated unit costs, were as follows: Considering an ensemble of three hundred facilities with an • Option 1: Sealed mechanical ventilation heating and aggregate area of approximately 1.5 million square meters cooling; all glazing sealed; airtightness improved as far as provided the total costs in 2022 prices of the four options: practicable; mechanical ventilation installed—£953/m2 • Option 1: €714 million • Option 2: Natural cross-ventilation; perimeter heating • Option 2: €864 million retained; greater opening of glazed areas; shading • Option 3: €1.18 billion provided—£1,152/m2 • Option 4: €1.33 billion • Option 3: Advanced natural cooling summer ventilation; The benefits of the alternative adaptation measures were supply of winter gardens; liberal opening areas above accrued in terms of reduction in heat-related mortality and the glazed areas to dissipate solar gains in addition to enhanced labor productivity of staff in the facilities. In the the natural ventilation provided in option 2—£1,568/m2 UK study, for example, labor productivity benefits for the four considered adaptation options ranged from 2 to • Option 4: Natural ventilation provided, incorporating 6 percent in 2030. For 2050, they were determined by passive down-draught cooling and perimeter heating; retrofitting option as follows: development of a low-energy cooling strategy using passive down-draught cooling—£1,776/m2 • Option 1: 6–34 percent • Option 2: 1–3 percent A conversion factor of 0.5 was applied to these UK unit • Option 3: 5–27 percent prices to adjust them to Aurelian prices in euros, which • Option 4: 5–30 percent 339 IEEP. 2012. Link. 340 IEEP. 2012. Link. 341 IEEP. 2012. Link. 342 IEEP. 2012. Link. 343 Frontier Economics. 2022. Risks to productivity in hospital settings from heat-induced health and wellbeing impacts. Internal report for the UKCCC (unpublished). Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 110 BOX 11. FIRE-RESISTANT BUILDING STANDARDS FOR FIRE SERVICE INFRASTRUCTURE IN AURELIA The country of Aurelia conducted an evaluation of its residential building in Aurelia.346 Typically, the highest building regulations for fireproofing design after class of ignition resistance for a building focuses on roof determining that more than 10 percent of its current design (which is also the component of the building most development is within the wildland-urban interface (WUI) susceptible to fire ignition and/or damage). Buildings that – a transition zone where wildlands interact with humans are resistant to severe fire exposure have roof coverings and their activities.344 Aurelia expects additional made of asphalt fiberglass–composition shingles or of development in intermix regions as the economy grows, city concrete or flat or barrel-shaped tiles.347 Such wildfire- centers become increasingly unaffordable, and sprawl resistant construction can add approximately 2–13 percent begins to occur near forested areas. Additionally, the to the entire cost of a new home, with baseline and evaluation found that 80 percent of fire stations and fire enhanced building materials adding 2–8 percent and service buildings are located in areas at high to very high optimum building materials 4–13 percent.348 The analysis risk for wildfire. Considering current vulnerability and future for Aurelia found that the low-end cost of improvements to development realities, Aurelia intends to take a climate- a WUI design for a new building would add approximately oriented review of existing building codes so it can upgrade €5,150 to average building costs; the high-end cost would for fire safety today with consideration of future climate add approximately €48,800. It should be noted that these realities (see more details in Box 17 in Annex 3). Review of values represent floor estimates that will likely be higher for the current legislation shows two weak points in current fire service and civil protection buildings, as they do not design guidance. First, the guidance does not mention account for specific measures they must consider, such as specifically how civil protection and fire service buildings flammable materials onsite that call for additional should be designed to enhance fire safety codes nor how fireproofing design considerations. Finally, the operations can be affected and risk can be reduced through transportation networks within the community must also be adaptation measures. Second, while the guidance mentions evaluated for the fire service to be operational during a fire hospitals, it provides no specific design requirements for event. fire safety or civil protection buildings. On the other hand, a strong point in the guidance is the mention of openings and Aurelia’s building regulation development committee, glazing systems, as well as their materiality in terms of along with its fire protection services, agreed to include the specifications to reduce fire spread. The current regulations above provisions in the next cycle of code development. also fail to mention microscale features,345 of design that They also provided low- and high-end cost estimates to could help prevent fire from crossing over from one building discuss with contractors and owners. As part of its future to the next. These include, at minimum, roof and gutter agenda, Aurelia has decided, as well, to conduct research characteristics, including roofing angle and material on the susceptibility to fire of its fire station and operation composition; geometry of gutters and eaves and the network and on design considerations. This would include distance between them to prevent fire from spreading to transportation routes, especially routes to current and the roof; and decks and verandas from which flammable future high-density areas requiring services. In addition, materials or fuels can cause ignition. the cost of fuel breaks and fire breaks in Aurelia will be considered and included in any masterplans for Because country and regional data on the cost of development in the WUI. Last, it will be prudent to update implementing fireproofing for buildings in the WUI are codes and regulations in future cycles for a 30- to 50-year lacking, data from different states in the United States policy and development plan to consider other areas of were used to produce a baseline estimate for a two-story high wildfire risk resulting from climate change. 344 Stein, S. M. et al. 2018. Wildffre, Wildlands, and People: Understanding and Preparing for Wildffre in the Wildland-Urban Interface. USDA Forest Service. 345 Vacca et al. 2020. WUI fire risk mitigation in Europe: A performance-based design approach at home-owner level. Journal of safety science and resilience, 1(2), pp.97-105. Link. 346 Home Innovation Research Labs. 2020. Cost Impact of Building a House in Compliance with IWUIC. National Association of Home Buildings. Link. Note that the values from tables in this report are averaged and converted to 2023 Euros for purposes of this study. The three cities in three states referenced in the report provide estimates from areas of differing densities and construction costs. 347 National Fire Protection Agency, Class A roof covering description. Source: Link. 348 Headwaters Economics. 2022. Construction costs for a wildfire-resistant home: California edition. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 111 A few key elements could be considered by the Croatia: Climate-proofing selected civil protection country of Aurelia to ensure the successful assets implementation of climate-proofing and retrofitting. For climate-proofed infrastructure, the development Croatia grapples with threats of climate change. In of guidelines and building standards for both new recent years, the country has encountered climatic designs and retrofitting of existing assets could extremes, notably the excessive heat of its most provide detailed information and examples of good intense summer of 2017, a 74 percent surge in practice and offer a performance-based design forest fires in 2022, and devastating cascading approach. Such guidelines could also include code- events in 2023.349 Croatia is among the countries based and above-code guidance for future proofing, most affected economically by climatic events;350 the especially prior to the implementation of large-scale cost of floods damage to infrastructure alone has climate-proofing retrofits that may face significant been estimated at 0.4 percent of GDP annually.351 resistance from utilities to locating cogeneration and Looming climate threats suggest more frequent and major electrical switchgear above the ground floor. intense disasters ahead, threatening multiple critical Moreover, planners must ensure that enhancing sectors.352 resilience to one type of hazard does not lead to maladaptation or other unintended consequences. If Croatia has taken steps to implement climate not properly retrofitted, for instance, buildings affected adaptation. Adopted in 2020, Croatia’s National by a seismic event could be further damaged by high Adaptation Strategy provides an assessment for the precipitation or increased temperatures under a future period up to 2040 with a view to 2070.353 According climate. Moreover, ensuring adequate financial to 2019 estimates, the total investment needed to funding and resources for climate-proofing of implement the strategy will be around €3.6 billion for infrastructure is crucial, as is using a sustainable the period up to 2040, with the average annual cost financial model for adaptation investments in the long amounting to around €183 million; such estimates term. Finally, the implementation and maintenance of provided useful information for planning projects for climate-proofed infrastructure requires cohesion EU funding (for example, Cohesion Policy funds). between national and subnational regulation and More than half of the estimated amount refers to the collaboration between central and local authorities, as implementation of “structural” measures, particularly well as effective monitoring and evaluation mechanisms in the sectors of agriculture, forestry, and water that can ensure high-quality review and constant management (with respect to water resources) and, upgrading of the adaptation measure. to a lesser extent, to energy and tourism. Investments in the first two sectors can be considered “no-regret measures”; as mentioned earlier, these are measures whose implementation is already planned that will also be helpful in terms of climate change adaptation. National authorities in Croatia have also developed legislation relevant to the enhancement of the climate resilience of infrastructure; this includes the Long- Term Renovation Strategy and the National Program for Green Urban Infrastructure. 349 See DW. 2022. Record high temperatures, and it has only just begun [Rekordno visoke temperature, a tek je počelo]. Link. See Global Forest Watch. 2023. Croatia. Link. 350 Climate-ADAPT. 2022. Croatia. Link. 351 Dottori et al. 2020. Adapting to rising river flood risk in the EU under climate change. Link. 352 State Hydrometeorological Institute (DHMZ). 2023. Climatological overview of the extreme weather in Croatia. July 2023 [Državni hidrometeorološki zavod in Croatian]. Link. 353 Government of Croatia. 2020. Climate change adaptation strategy in the Republic of Croatia for the period up to 2040 with a view to 2070 [Strategija prilagodbe klimatskim promjenama u Republici Hrvatskoj za razdoblje do 2040. godine s pogledom na 2070. Godinu] (Official Gazette 46/2020). Link. See Government of Croatia. 2023. Adaptation to Climate Change [Prilagodba Klimatskim Promjenama]. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 112 Croatia has taken advantage of opportunities within a portfolio of assets based on climate risk analytics. the EU’s 2021–27 funding cycle to invest in strengthening climate adaptation measures. The analysis considered climate risks that could be The total EU contribution to Croatia under Policy relevant to the upgrading of a broad set of critical Objective 2 (PO2)— “greener, low carbon transitioning infrastructure types and, more generally, to the towards a net zero carbon economy”—of the Cohesion portfolio management of assets (see Box 12). The Policy amounts to €2.4 billion of an overall €2.9 billion. analysis also assessed whether additional retrofitting For CCA-specific investments under PO2, the EU total measures should be considered to enhance resilience contribution amounts to €421.2 million, with an overall and what design features should be considered for amount of €495.6 million.354 Using the European new buildings, and it sought to inform policy dialogue Regional Development Fund (ERDF), Croatia renovated on the management of a critical infrastructure 250,000 square meters and 69 public buildings portfolio. (hospitals and schools) with an expected annual savings of 70 GWh in energy consumption.355 Finally, this analysis complements a report that is a companion to this one. That study included the The results of this CCA costing analysis can collection and analysis of data on more than 60 complement studies for prioritizing the upgrading of buildings used for emergency response services to critical infrastructure that may ultimately feed into assess their vulnerability356 and the benefits and updated CCA and DRM plans. The adaptation objective costs of providing them with seismic upgrading and of the analysis was to inform potential CCA measures for energy efficiency interventions.357 BOX 12. PROJECTED CLIMATE-RELATED RISKS AND IMPACTS ON CRITICAL INFRASTRUCTURE The analysis for Croatia built on quantitative and qualitative The study produced new and interesting findings on future information on the risks of multiple hazards and impact wildfire risks and exposures resulting from climate analytics gathered for this project and from external change.360 As a result of drier and windier conditions, sources. Information on exposure of infrastructure stocks wildfire hazard is expected to increase in the north and was extracted from the GEM database,358 while general northeastern parts of the country, where the wildfire information on extreme temperatures and floods, with susceptibility currently is low. The places at high risk are future projections of heat impacts as per the COACCH mainly grassland and broadleaves areas, portending losses scenario explorer, came from the 2019 NRA.359 This in the agricultural and forestry sectors. A trend of increasing analysis was also conducted in line with EUCRA’s “Critical annual losses overall in assets and critical infrastructure infrastructure failure” storyline. It adopted a rapid risk from wildfire is expected in the next 25 years. The losses for assessment approach, viewing the vulnerability of critical commercial and residential buildings, for instance, are infrastructure from the standpoint of a portfolio of climate estimated at €8 million and €25 million per year, respectively. and natural hazards—a perspective that can help inform In addition, more roads may be exposed to risks in the future more-detailed assessments in the future. under the SSP1 RCP2.6 climate scenario, with the exposure even worse if the SSP5 RCP8.5 scenario is adopted. 354 EU. 2023a. Link. 355 EC. 2020. Link. 356 WB and EC. 2024 forthcoming. From Data to Decisions. The vulnerability analysis investigated seismic risk and estimated replacement costs and annual average losses, using probabilistic scenarios for 95-, 225-, and 475-year return periods, as well as a deterministic scenario event based on the 1880 earthquake in the city of Zagreb. To the extent possible, indirect impacts on the economy were estimated, including broad socioeconomic impacts and disruptions, including in GDP. 357 The analysis considered estimates of global and regional costs related to upgrading for seismic and climate protection. Among these were estimates for energy efficiency and levels of upgrading, including to meet EU-wide standards, building codes, and renovation strategy. The benefits considered were those related to risk reduction, taking into account their temporal and spatial contexts and current as well as future climate projections, along with the co-benefits generated. 358 Global Earthquake Model. Croatia. Link. 359 COACCH. Climate Change Impact Scenario Explorer. Link. 360 The CIMA Foundation. 2023. Wildfire risk analytics for European Countries. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 113 This analysis was to be consistent with approaches The long list of CCA measures from the literature taken in other countries and provide inspiration for used for the Aurelia case study was considered for further research. The case study followed climate- Croatia, with some selected for further consideration. proofing of investment principles,361 considering The costs for these selected measures could be climate change mitigation and adaptation, particu­ adapted for the Croatian context and for additional larly measures to enhance energy efficiency and hazards with further studies, based on local market flood resilience; wind- and heat-proofing price information, expert consultations, and more in- considerations from the literature; and country best depth vulnerability assessments on the portfolio of practices.362 The analysis undertaken for Croatia assets. used a portfolio-level rapid identification of climate risks and identification of CCA measures and cost For Croatia, the decision was to undertake first an ranges to support initial prioritization of risk reduction analysis considering the selected measures and one and preparedness investments at sectoral level, hazard. The analysis focused on the additional costs building on previous initiatives and providing a basis of proofing buildings against heat, considering for future updates and refinements. guidelines such as those put forth by the EU in 2023;363 follow-up studies might consider wildfire or Potential risk-proofing and adaptation measures flood risk. The results of the heat analysis are were outlined for selected infrastructure assets. summarized in Box 13. BOX 13. HEAT RESILIENCE IMPROVEMENTS TO EXISTING BUILDINGS IN CROATIA The analysis sought to estimate the cost of improvements • Option 2: Natural cross-ventilation, retaining perimeter to increase the resilience to heat of existing buildings in heating; greater opening of glazed areas; shading Croatia, considering marginal costs. Retrofitting older provided buildings with climate-adaptive measures, such as improved insulation, energy efficient HVAC systems, and • Option 3: Advanced natural cooling summer ventilation; weather-resistant roofing materials, helps reduce energy supply of winter gardens; liberal opening areas above consumption and carbon emissions, while the incorporation the glazed areas to dissipate solar gains in addition to of features like stormwater management, green the natural ventilation provided in option 2 infrastructure, and enhanced ventilation systems will help the buildings withstand the extreme weather events that • Option 4: Natural ventilation provided, incorporating are increasing in frequency and severity. These passive down-draught cooling and perimeter heating; improvements not only contribute to the longevity and development of a low-energy cooling strategy using safety of existing structures; they make them more passive down-draught cooling adaptable to the changing climate and create a more sustainable and resilient built environment. Estimation of the costs of these options required taking into account the types and geographical distribution of buildings The four retrofit measures considered by the analysis were in Croatia, with asset valuations at the national level as follows: provided by the GEM database. While the analysis would be heavily skewed by the age distribution of the buildings, this Option 1: Sealed mechanical ventilation heating and information was not readily available, so assumptions had cooling; all glazing sealed; airtightness improved as far as to be made concerning asset condition, valuation, and so practicable and mechanical ventilation installed on. As elsewhere, marginal costs were based on building size and type (that is, use category). A short-term outlook 361 In line with EC. 2021. Technical guidance on the climate proofing of infrastructure in the period 2021-2027. Link. 362 OECD. 2023b. Link; Lynch et al. 2019. Fighting Wildfires With Innovation, Insurance Information Institute. Link.; Interreg. 2022. Climate proofing of building codes. Link.; Miyamoto. 2019. Overview of engineering options for increasing infrastructure resilience and Increasing infrastructure resilience technical annex. Background papers for WB report that was published Link.; WB. 2019. Overview of Engineering Options for Increasing Infrastructure Resilience: Final Report. Link.; Hallegatte et al. 2019. Link.; UN. 2021. Climate Proofing Toolkit: For Basic Urban Infrastructure with a Focus on Water and Sanitation. Link.; EC. 2018. Climate change adaptation of major infrastructure projects. Link.; 363 EC. 2023. Technical guidance on adapting buildings to climate change. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 114 was considered for two heat resilience design scenarios: a The marginal costs over the next five years for provision of lower estimate for cost allowing for, for example, the the considered interventions in existing buildings ranged installation and maintenance of sealed mechanical from €1.32 billion to €2.84 billion, with a net present cost ventilation plus sealed glazing; and an upper estimate (NPC) for interventions in the period up to 2050 ranging allowing for, for example, an advanced natural ventilation from €6.19 billion to €13.28 billion. Note that these system and energy efficient cooling system, provision of cumulative totals may be further subdivided by building heat-resistant materials, external and internal shading, and category for further analysis, with prioritization strategies high-performance glazing, plus green, blue, and hybrid for retrofit developed per category. Necessary underlying solutions. To facilitate the analysis, an obsolescence rate assumptions concerning labor availability and supply had to be assumed for existing facilities and an assumed chain capacity can be nuanced in the analysis. Furthermore, retrofit rate of 10 percent of necessary facilities replaced the retrofit rate, assumed here at 10 percent of the stock per five-year period over the considered time horizon (that per five-year period, can become a variable in a multicriteria is, 60 percent of stock retrofitted by 2050). optimization. Finally, the analysis can incorporate national strategies concerning targets and/or incentives for the retrofitting of, for example, residential stock. The results from this case study can inform smart Change Mission.367 The references and links to the prioritization and decision-making and improve literature and best practices from other countries on integration of the disaster and CCA agendas in a measures for climate-proofing included in the study practical manner. This study provides only a starting can be integrated into the enhancement of resilience point, as the analysis considered a single hazard for to wildfires, floods, and extreme heat risks. Finally, one type of asset. Moreover, the case study costed this study can be expanded to consider more hazards measures for resilience to heat that go beyond typical for climate-proofing, in terms of both CCA and DRM. energy efficiency measures. While initial analysis can focus on one hazard, it is crucial to consider a holistic approach that incorporates multiple risks to maximize Romania: Flood-proofing and upgrading co-benefits.364 By understanding the broader costs transportation networks and benefits of implementing holistic improvement measures rather than partial solutions, decision- Romania is highly exposed to flood risk, but evidence makers can weigh various criteria (economic, time on the impacts of flooding on critical infrastructure and resources, political, operational) and the benefits systems is too limited to allow for the effective of different interventions, including preventing prioritization and design of interventions. In line maladaptation, avoiding future retrofits, and ensuring with Romania’s NAP, a high priority for climate cost-effective CCA. change adaptation until 2030 is to conduct a vulnerability assessment of the transportation sector The overall purpose of this case study was linked to and integrate climate change considerations into a policy objective of prioritizing the “smart” planning and decision-making. The Flood rehabilitation or reconstruction of critical infra­ Reimbursable Advisory Services (RAS)368 emphasizes structure buildings. This type of analysis can inform the importance of adapting infrastructure to measures aligned with the EU Renovation Strategy365 intensifying risks of flooding by updating technical and integrated renovation approaches.366 Testing regulations, improving infrastructure inventory, and transformative solutions is also important in the prioritizing at-risk assets. context of implementing the EU Adaptation to Climate 364 WB, EC. 2021.Investment in Disaster Risk Management in Europe Makes Economic Sense. Link. 365 EC. 2020. A Renovation Wave for Europe - Greening Our Buildings, Creating Jobs, Improving Lives. Link. 366 Butenweg, C. et al. 2022. Policy measures for seismic and energy upgrading of buildings in EU Member States. Link. 367 Government of France. 2023. Testing and demonstrating transformative solutions to protect critical infrastructure from climate change, mainstreaming nature-based solutions. Link. 368 WB. 2019. Technical Support for the Preparation of Flood Risk Management Plans for Romania (P170989). Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 115 This case study was conducted to demonstrate how infrastructure and indirect damage in terms of to assess systemwide flood vulnerabilities and disruptions to transportation and wider prioritize investments in resilient transportation macroeconomic impacts. The probability of flood networks, as planned in the NAP. The objective was events under future climate scenarios was to develop and cost adaptation measures in line with estimated by recasting the probability of current vulnerability analytics of the transportation network flood hazards in line with precipitation projections to support decision-making at sectoral and national under different climate change scenarios in levels. The analysis built on the transportation established climate models.375 Applying network vulnerability assessment undertaken for the vulnerability curves from previous assessments, Country Climate and Development Report (CCDR) for the analysis translated kilometers of flood-exposed Romania,369 which focused on current climate roads into average annual losses in euros. hazards. This new case study expanded that analysis to flood risks under future climate change scenarios • Step 2: Determining potential adaptation needs and how they would alter the identification, and costs. The case study then gauged the costs prioritization, and costing of resilience investment. and benefits of integrating climate change Several inputs to the analysis were based on the adaptation into flood risk management in the outputs of previous analytics,370 and the overall transportation sector’s investment portfolio. High- methodological approach was based on analytics level technical costing of resilience measures for previously applied and validated in Albania,371 transportation networks was based on insights from Serbia,372 Türkiye,373 and other countries, as well as Romania’s strategic documents (NAP) and in line recent scientific literature.374 with World Bank estimates of public investment needs in the sector and additional costs for The main criteria for this analysis were to ensure incorporating resilience into transportation.376 analytical rigor, practicality, and replicability. It Combined with total road exposure data (Step 1), allowed for estimation of the order of magnitude of this process provided insights into future road impacts on the transportation sector, as well as budget requirements and adaptation costs resulting subsequent updates and extensions as improved from impending flood risks due to climate change. data become available. The analysis consisted of a network-based economic analysis of resilience • Step 3: Estimating the potential benefits of CCA investments, following three analytical steps: measures in terms of reduced expected losses. The benefit-cost ratio of transportation resilience • Step 1: Estimating potential impacts of floods on investments can vary widely, depending on the transportation networks. The case study estimated assumptions and scenarios considered. This two types of damage under current and future analysis established a benefit-cost ratio by climate conditions: direct damage to transportation comparing the adaptation investment needs (Step 369 WB. 2023. Romania CCDR. Link. WB and EC. 2024. From Data to Decisions: Tools for Making Smart Investments in Prevention and Preparedness. 370 For the second implementation cycle of the EU Floods Directive (FD), Romania crafted flood risk management plans for its 12 units of management. During the 2019 Preliminary Flood Risk Assessment, 526 areas of potential significant flood risks were identified, leading to the development of new hazard and risk maps and programs of measures, which emphasize sustainable, climate-resilient interventions, prioritizing nonstructural measures, green infrastructure, and nature-based solutions; these were integrated into the draft flood risk management plans (FRMPs). WB. 2023. Report on advice provided to MEWF in the preparation of twelve (12) final draft Flood Risk Management Plans”. 371 Xiong, J. & Alegre, E. X., 2019. Climate Resilient Road Assets in Albania, Washington, DC.: WB. Lin.k 372 Vukanovic, 2018. Climate and disaster resilient Transport Infrastructure. Washington DC: WB; Rozenberg et al, 2019. From A Rocky Road to Smooth Sailing: Building Transport Resilience to Natural Disasters. Washington DC: WB. 373 WB. 2022c. Link. 374 He et al. 2022. Mobility and resilience: A global assessment of flood impacts on urban road networks. Link; “Hallegatte, S. et al. 2019. Link; Rozenberg, Julie; Fay, Marianne. 2019. Beyond the Gap: How Countries Can Afford the Infrastructure They Need while Protecting the Planet. WB. Link; van Ginkel, K. C. H., Dottori, F., Alfieri, L., Feyen, L., and Koks, E. E. 2021. Flood risk assessment of the European road network, Nat. Hazards Earth Syst. Sci., 21, 1011–1027, Link; EC. 2018. 375 Based on the CMIP6 model ensemble, or by use downscaled rainfall projections from EURO-CORDEX for 2050, 2075, etc. 376 Rozenberg; Fay. 2019. Link; Hallegatte, Stephane et al. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 116 2) to the direct and indirect losses that could be 65 percent higher, respectively. For the railway mitigated by such investments (Step 1) and then network, even a small-scale flood event can cause comparing the result to existing estimates from the significant disruption: a 5-year flood event almost literature and country case studies. doubles the nationwide cost of passenger railways, increasing to around 180 percent for a 200-year The analysis yielded several key insights into the event.377 Under future climate by 2050, economic vulnerability of Romania’s transportation network, impacts from flooding are expected to be even the impacts of floods, and the costs of CCA measures greater. Taking the example of agricultural losses and their potential BCRs. related to flood-induced transportation disruptions, annual nationwide losses are projected to increase Under current climate conditions, flooding is by an average of around 35 percent for SSP1 RCP1.9 expected to increase nationwide annual road and around 51 percent for SSP5 RCP8.5 by 2050 transportation costs by around 6 percent and compared to the baseline average annual loss passenger railway costs by around 25 percent (AAL). By 2075, the losses could increase by between compared to a baseline scenario with no flooding. 30.7 percent (SSP1 RCP1.9 scenario) and For 10-, 100-, and 500-year return-period flood 90.3 percent (SSP5 RCP 8.5 scenario, see events, the costs will be 26 percent, 52 percent, and Figure 22). Figure 22. Increases in agricultural losses from flood-related transportation disruptions 100% 90% 80% 70% SSP1-1.9 60% SSP1-2.6 50% SSP2-4.5 40% SSP3-7.0 30% 20% SSP5-8.5 10% 0% Current 2025 2050 2075 Source: World Bank. The analysis estimated that resilience measures in Asia region. Because most of Romania’s the transportation sector would increase public transportation system is exposed to various hazards, transportation investments by only 3.4 percent but building all new transportation infrastructure assets yield substantial benefits. Romania’s infrastructure to higher resilience standards could reduce average resilience investment needs are similar to those of annual repair costs by a factor of 6.6—significantly countries in the OECD and the Europe and Central more than in the other countries (Figure 23). 377 Although these large numbers are partly artifacts of modeling (the railway network is less disaggregated than the road network), the findings have some ground truth for two reasons. First, inundation of a small segment of a very long road will cause only local disruption on the inundated segment. In contrast, localized inundation of a railway segment, especially a high-intensity inundation, can substantially disrupt the whole route or even render it impassable. Second, while the presence of smaller local roads can sometimes provide alternate routes when main roads are flooded, such alternate local routes are not available for railway networks. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 117 Figure 23. Investment needs and cost efficiency of resilient transportation infrastructure a) Annual investment needs to make transportation b) Factor by which resilient infrastructure would reduce infrastructure more resilient by 2030  annual repair costs 5 7 4,5 6 Addi tional cost (% of baseline) 4 5 3,5 Factor 3 4 2,5 3 2 1,5 2 1 1 0,5 0 0 Romania OECD ECA HICs Romania OECD ECA HICs Source: Hallegatte, Rentschler, and Rozenberg. 2019. Note: ECA = Europe and Central Asia; HICs = high-income countries. Overall, while resilience measures are case- and systems. While policy-makers have traditionally been location-specific, the nationwide assessment more likely to consider engineering measures, such suggests a strong economic case for resilience as filter drains in national adaptation investments, measures, including nature-based and engineering nature-based solutions have relatively low solutions. The case study specifically estimated cost implementation costs and wider co-benefits and and benefit of measures over the implementation should also be promoted. The earlier such resilience period until 2080 for reducing the impacts of measures are implemented, the larger the losses increasingly likely and severe flood events across avoided (and the greater the benefits) will be. Romania’s road network. Implementation costs for nature-based solutions, such as incorporating swales, This analysis demonstrated how a comprehensive ponds, and geotextiles, were estimated at €123 benefit-cost assessment of sectoral CCA measures million, yielding benefits with a net present value of can be conducted in a way that accounts for indirect about €1.34 billion (lower bound). Similarly, effects across systems, regions, and networks. traditional engineering measures, such as installing It remained limited, however, in sectoral scope and filters and drains, were estimated to cost €491 million granularity, as it was applied to a single hazard (flood) and yield benefits with a net present value of €5.38 with limited sectoral coverage (transportation, billion (upper bound). agriculture). As part of a dedicated risk assessment and investment appraisal, further consideration of In short, the economic case for resilience measures exposure, vulnerability, and potential impacts of reflects not only the wide range of impacts multiple hazards across sectors would be preferable. associated with floods but the opportunities In addition, the impact of additional shocks and presented by different types of solutions. CCA stressors could be assessed and the benefits of measures would avert direct damage of flooding to adaptation evaluated through complementary road networks (and hence mounting repair and scenario-based analyses. Benefits of resilience maintenance costs), as well as the wider economic investments that may be difficult to monetize but impacts associated with transportation and supply strengthen the business case could be illuminated by chain disruptions propagating through economic broadening how they are defined, in line with the Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 118 Triple Dividend framework.378 Finally, accounting for smooth collaboration, including between central and the spectrum of estimates associated with the local authorities, as well as among different line different data sources, especially in the case of long- ministries and transportation agencies. Regulation term projections, is crucial for robust decision- and legal standards can be essential to ensure making. Although such comprehensive assessments infrastructure developers and operators (public and have substantial requirements in terms of data and private) take climate risk into account, especially resources, yet they could better identify the benefits during planning and design phases. Investments in of adaptation under compounding shocks. data systems and decision-making capacity can support the continuous monitoring of infrastructure This case study provides an example for other performance, thus enabling more rapid and spatially countries in Europe, many of which have targeted response to shocks, as well as smarter use transportation networks and infrastructure systems of limited funds. Finally, it is important to note that exposed to high flood risks. A COACCH flood risk ensuring adequate financing arrangements for assessment identified three flood hotspots in the EU resilience measure is easier said than done; financing road network, including the Netherlands; the western needs to be earmarked early in project cycles to Alps in France, Italy, and Switzerland; and Croatia conduct risk assessments, and contingency financing and Serbia in the northwestern Balkans.379 strategies are key for authorities to achieve quick Assessments like COACCH, however, tend to focus on recovery of transportation assets damaged by direct exposure and damage while overlooking climatic shocks. broader macroeconomic impacts. Replicating this case study would help countries understand how Experience shows that no single measure can make localized flood impacts can propagate across infrastructure systems resilient. Instead, govern­ infrastructure and supply chain networks, thus ments—in partnership with all stakeholders, leading to significant losses in other vulnerable including transportation agencies, investors, business sectors (such as agriculture) and regions. By associations, and citizen organizations—need to identifying the most critical chokepoints in road and define and implement a consistent strategy to tackle rail networks, this analysis can assist policy-makers the many obstacles to making transportation systems in prioritizing CCA investments cost-effectively. more resilient. Of particular importance is an emphasis on the early stages of infrastructure system The network effects captured in this case study development—the design of regulations, the highlight the need to design CCA measures in the production of hazard data and master plans, and the transportation sector to tackle systemic vulnera­ initial stages of new infrastructure asset design. In bilities in assets, networks, institutions, and these early stages, small investments can significantly planning. Strengthening climate resilience requires improve the overall resilience of infrastructure going beyond standard engineering upgrades to systems and generate large benefits. Implementing implementing a concerted package of measures in resilience measures early has been shown not only to five areas, as summarized in Table 4. Getting the increase the resilience of transportation systems but basics right—including through operations and to improve their overall governance and efficiency, maintenance—is crucial to improving baseline thus making them no-regret options regardless of service quality as well as resilience. Ensuring climate change. institutional roles are well-defined is key to enabling 378 Tanner et al. 2015. The Triple Dividend of Resilience. GFDRR/World Bank/ODI Link. 379 Van Ginkel, K et al. 2021. Link. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 119 Table 4. Five recommendations to strengthen the climate resilience of transportation systems RECOMMENDATION ACTIONS 1. Get the basics right 1.1. Introduce the enforce regulations, construction codes and procurement rules 1.2.Create systems for appropriate infrastructure operation, maintenance, and postincident response 1.3. Provide appropriate funding and financing for infrastructure planning, construction, and maintenance. 2. Build institutions for resilience 2.1. Implement a whole-of-government approach to resilient infrastructure, building on existing regulatory systems 2.2. Identify critical infrastructure and define acceptance and intolerable risk levels 2.3. Ensure equitable access to resilient infrastructure 3. Create regulations and incentives 3.1. Consider resilience objectives in master plans, standards, and for resilience regulations and adjust them regularly to account for climate change 3.2. Create economic incentives for service providers to offer resilient infrastructure assets and services 3.3 Ensure that infrastructure regulations are consistent with risk-informed land use plans and guide development toward safer areas 4. Improve decision making 4.1 Invest in freely accessible natural hazard and climate change data 4.2. Make robust decisions and minimize the potential for regret and catastrophic failures 4.3 Build the skills needed to use data and models and mobilzie the know- how of the private sector 5. Provide financing 5.1 Provide adequate funding to include risk assessments in master plans and early project design 5.2 Develop a government-wide financial protection strategy and contingency plans 5.3. Promote transparency to better inform investors and decision makers Source: Hallegatte, Rentschler, and Rozenberg. 2019. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 120 Ways forward to enhance CCA costing evidence The analysis of case studies to illustrate certain that revealed many lessons learned and avenues for “use cases” had twin benefits. It allowed calculation further research (see Box 14 below). Insights on CCA of the costs of CCA measures that could feed into measures for the health sector derived from the case updates of NAPs, sectoral strategies, and risk study for Bulgaria could be considered in broader reduction programs (as summarized in Figure 24). It and detailed assessments for the sector and, also provided useful lessons learned for the ultimately, feed into national programs and NAPs. application of various methodologies and the Insights on urban heat CCA measures could be replication of these studies for other sectors and applied by local governments when formulating their countries. own strategies. The analysis on climate-proofing infrastructure conducted for Croatia and Romania Although analytics are very specific for each use could inform early conceptual thinking around case, insights and results can support analyses in programs to upgrade public infrastructure elsewhere. other countries. Costing for the forestry and Most generally, evidence gathered during these emergency response sector considering wildfire risks studies could be shared through knowledge networks, in Bulgaria and Sweden, for instance, provided very with broad focus (on NAP costing or macroeconomic useful information to update NAPs, civil protection analysis) or specific focus (on sectors such as forestry programs, and forestry strategies across Europe. or health or hazards such as wildfires or heat). Further Analytics on wildfire that informed the Bulgaria case analysis would be needed to assess how transferable study were informed by new quantitative evidence studies and methods are from one context to another. BOX 14. LESSONS LEARNED FROM WILDFIRE RISK ANALYTICS CONSIDERING CLIMATE PROJECTIONS The novel wildfire risk and loss modeling framework focused comparability between regions. The developed model on incorporating the effects of climate parameters and revealed future trends of changes in susceptibility and using higher-resolution data. This approach allowed for hazard to large fires in the four countries, which are deeper insights into the evolution of risk considering expected to experience an increase in temperature and different climate change scenarios. The analysis revealed heat wave days leading to higher risk of extreme wildfires. an increase in wildfire risk across the analyzed countries The study also uses information on social vulnerability and (Bulgaria, Croatia, Greece, and Romania) and showed the coping capacity to enrich the understanding of wildfire importance of considering different climate models and risk, where a Wildfire Social Risk Index was developed to year-to-year variability in understanding the possible range include data on fire-fighting capacity and provide insight of outcomes. The new framework leverages pan-European into which regions are more vulnerable and require further fire occurrence data, strengthening the reliability and investments.380 The studies developed for this report found high the complex timing of climate change adaptation and benefits from portfolios of CCA measures that the spectrum of projected climate impacts and, consider multiple risks and objectives and soft and therefore, of appropriate CCA measures. More focus hard measures. Much of the adaptation cost literature on softer measures, and on portfolio approaches, focuses on a narrow set of technical options (for would be useful. As these can be more difficult to cost example, the cost of dikes for flood protection). The than technical measures, enhanced guidance on studies here revealed that low-cost and early no- how to cost them would be useful. regret actions based on nontechnical options are often available and, further, that portfolios of options A knowledge gap remains on the effectiveness and are usually beneficial when they take into account benefits of CCA measures. A common theme across 380 WB and EC. 2024 forthcoming. From data to decisions: tools for making smart investments in prevention and preparedness in Europe. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 121 studies is that information is insufficient on the allow the actors to start testing and adopting effectiveness of adaptation in general, and wide approaches to costing. variations are also found in the effectiveness of the same options between locations and contexts. Going forward, analytical gaps need to be filled to Further investigation of effectiveness (and benefits) allow for more detailed and expanded adaptation is critical, including more ex post analysis on existing studies. A final issue identified was the data gaps for no-regret options and early examples of applied more detailed analysis. While increasing amounts of adaptation, as well as ex ante modeling that looks at data are available from Copernicus and ISIMIP, their the important issues related to the gauging of benefit extraction and use for context-specific risk analysis is ranges and what is important to consider. complicated, and gaps often occur with regard to the specific variables of interest for adaptation (at least in Possibilities exist to scale up and replicate analytics, terms of easy access). These data gaps are larger for but certain limitations remain. The potential to apply adaptation costing, and while many inventories of the methods demonstrated in this report to other options are available, translating them into applied contexts is considerable, and doing so would be adaptation analyses and assessing costs and extremely useful in encouraging various countries, effectiveness is subject to major data limitations. A sectors, and other stakeholders to gain some continued focus on research and innovation (through experience in adaptation costing. Nonetheless, the Horizon Europe and others) is needed to provide approaches show that such studies often require more real-world adaptation information that can be considerable expert knowledge, as well as time and used in planning ranging from national to local to resources. Consideration has to be given to how to support decision-making on adaptation over the next promote studies (and motivate actors to do costing) five years. but at the same time provide the support needed to Figure 24. Analytics for use cases informing each other 1. 2. 3. Program level Sector level National level (investment portfolio) CCA costing CCA costing CCA costing Source: World Bank. Expanding the Evidence Base on Costing CCA with “Use Cases”: Results and Lessons learned 122 3. Conclusion and Policy Recommendations Costing CCA: Orienting our compass . . . Scaling up investments in climate adaptation 22 European countries) included CCA cost estimates. requires more and better information on their costs. As an intellectual exercise, illustrative short-term A knowledge gap regarding the costs of CCA at annual adaptation costs can be derived based on national and EU levels inhibits countries from taking extrapolation from national studies; the result timely actions, making decisions about CCA indicates a level of €15 billion–€78 billion per year investments, and scaling up finance (public and for EU-27 until 2030, with central and medium private) to address current insufficiencies in estimates of €21 billion and €64 billion per year, adaptation. In 2023 reporting from EU Member respectively. States to the European Environment Agency (EEA), the Member States noted substantial technical and Effective adaptation pathways can be developed by resource constraints on developing comprehensive combining current and future climate risk climate risk assessments and studies for CCA costing, information with multidisciplinary expertise. To as well as on the development of better expenditure prepare for compound, multi-hazard, and disruptive tagging and reporting systems on climate adaptation events, comprehensive investment packages need to expenditures. By enhancing the knowledge base of be developed for CCA and DRM. Because climate methodologies and evidence on CCA costing, this change could lead to transformative and systemic report can support the Member States in their process changes in sectors that change the fundamental of CCA costing, identifying adaptation funding gaps, attributes of a social-ecological system, there is a and implementing CCA expenditure tagging. need for more strategic analysis today and long lead times for planning. The development of adaptation Adaptation costs for various objectives differ, based pathways starts with current risks and looks at future on economic efficiency, acceptable levels of risks, pathways, considering the diversity of projected or risk minimization. Costs also differ with relation to scenarios for climate impacts. This approach the timing of adaptation and, especially, with the encourages adaptive management and iterative focus on near-term investment (to 2030) to scale up learning and helps with navigation of the challenges national adaptation planning and investment. Existing posed by the spectrum of possible climate impacts, estimates from individual countries on CCA costs at leading to numerous possible ways to adapt. the national level vary from €3.96 million to €11.6 billion per year, with large disparities in their coverage This report provided an overview for practitioners of risks and sectors. Of the more than 120 literature and policy-makers of methodologies, the literature, reports reviewed by this study, only 30 or so (covering and country examples for costing CCA. There is no 123 single blueprint or approach for costing CCA, and the With rising adaptation costs, the demand to assess appropriate method depends on the specific the economic benefits of adaptation and to compare objectives and the level and type of CCA cost alternative uses of resources will increase, requiring assessment. The report applied these insights for more concentration on economic appraisal. The specific “use cases”—national, sectoral, and European Commission (EC) and many Member States programmatic— presenting generalized applications use economic appraisal to assess public policies, of adaptation in particular decision-making contexts, strategies, and investments as part of impact as defined in a recent DG CLIMA study. Five new case assessments. The analysis of the economic benefits studies, covering four countries and one fictional and the social cost-benefit analysis of adaptation is of example, complemented these use cases, providing growing importance, especially given the likely more practical applications to support decision- demand for public financing of adaptation, but it is making. The study focused on the short-term also challenging because of the range of projected timelines (2030s–50s) of the most relevance to climate impacts and the complexity of finding the policy decision-making to supplement existing right timing for adaptation (as adaptation requires research and studies, which often focus on medium- upfront costs but often yields benefits in the long to long-term timelines (2050s–2100s). The costing term). This study demonstrated how to extend costing of adaptation for national policy requires multiple analysis and begin to consider adaptation benefit- evidence lines and studies and develops over time as cost analysis with respect to short-term investments. more evidence emerges. The demand for such analysis will almost certainly grow, but such analysis is challenging. . . . toward effective and resilient pathways Adaptation costing studies spur important multi- level and highlighted possible synergies between CCM stakeholder dialogues and inform policy discussion, and CCA investments.381 Studies in France, focusing planning, and budgeting for mainstreaming and on low-regret measures in the short term, have scaling up CCA. Across the EU, such costing informed the next National Financial Budget Strategy processes have helped raise awareness, initiate and longer-term financial and fiscal planning based on national discussion, support decisions, and improve various climate scenarios. France has also begun systems to monitor and track progress on CCA. They preparations for a 4°C world based on the national have contributed to mainstreaming CCA into line debates that informed the updating of the National ministries’ plans, while the more complex assessments Adaptation Plan in 2023. Such preparations represent have sought to determine the effectiveness of a starting point for larger-scale systemic changes and measures to be selected, prioritized, and implemented. the setting of pathways for more transformational In Austria and Germany, decade-long adaptation adaptation.382 studies with multiple building blocks revealed a need for better expenditure tracking at both national and Lessons from EU countries provide invaluable local levels to improve financing for adaptation; these insights for better planning and budgeting for CCA. studies took note of the substantial costs and benefits National planning studies like those in France, which that could also be expected at the macroeconomic estimated early adaptation costs at around €2 billion 381 Tröltzsch, J., et al. 2012. Link.; IÖW. 2021. Link.; Knittel, N., et al. 2017.Link; Government of Austria. 2022.Spending Review im Rahmen des Aufbau- und Resilienzplans - Modul 1 „Analyse der klima- und energiepolitischen Förder- und Anreizlandschaft“. Link.; Eichberger, S., et al. 2023. Budgeting for Climate Action: Lessons from Austria, France, and the European Union. Link. 382 Depoues et al. 2022.; Alexandre, S., et al. 2019. Link.; Eichberger, S., et al. 2023. Budgeting for Climate Action: Lessons from Austria, France, and the European Union. Link.; I4CE. 2023. Economic implications of adaptation pathways (upcoming). Link. Conclusion and Policy recommendations 124 annually in this decade, have influenced short-term Building resilient futures in the face of evolving financial strategies as well as medium- and long-term climate risks, including compound, multi-hazard, planning. Austria’s estimate of €421 million–€573 and disruptive events, requires developing million and Germany’s of €140 billion–€142 billion comprehensive investment packages for CCA and annually, were the conclusion of years of collaborative DRM, with a mixture of options that evolve over research. The studies highlighted the pressing need time. Countries can balance both immediate and for improved expenditure tracking and a better long-term adaptation strategies to tackle hazards understanding of broader macroeconomic and encourage more research on the costs and implications to further improve such estimations. scalability of measures. Within a portfolio, short-term, Bulgaria and Romania, with their research low-cost adaptation measures can be considered determining adaptation costs until 2030 of alongside more resource-intensive, long-term capital approximately €7 billion and more than €19 billion, investments. A suite of measures that include no- respectively, have enriched national dialogues on regret, climate-smart integration and early adaptation multi-hazard investments and financial resilience. planning to support future scale-up creates The new case studies undertaken in this report also adaptation pathways and ensures the benefits of provided new insights. Sweden’s CCA costing adaptation are delivered early on, while taking the analysis, focused on the forestry sector, helped first steps toward longer-term systemic changes. The identify the high returns of adaptive forest scale-up of plans and early steps for longer-term management and capacity-building measures. investment also provide opportunities for monitoring, Croatia’s findings on climate-proofing underscored evaluation, and learning to improve future decisions the significance of infrastructure upgrades in future and for ongoing multi-decade investments (either programs and the importance of a national dialogue scaling up adaptation over time as risks evolve or on managing multi-hazard risks, while initial estimates getting better information before tackling expensive of €123 million–€491 million for climate-proofing the options, such as retrofitting). These portfolios often transportation networks in Romania against flood work well when they include mixtures of technical risks enhanced the knowledge base for future in- and nontechnical options (hard and soft) and of green depth multi-hazard assessments. Together, these and grey (soft and hard) measures. Measures studies offered a comprehensive roadmap, informing considered in a particular adaptation portfolio can both sectoral strategies and National Adaptation geared to key performance indicators relevant to that Plans for countries embarking on climate change thematic area, as exemplified in this report. adaptation. Further research and ways forward This report was limited in its scope and needs to be available only in local languages; and the types of considered in the context of broader CCA debates measures covered (hard structural versus soft and studies. Adaptation is a complex topic, and behavioral or policy measures) call for more complex decisions on investments need to be based on approaches than has been the case for mitigation. societal debates, cross-sectoral studies, cross- This report focused on a selection of use cases and hazard risk analytics, economic studies, and referenced the literature for further insights. The key adaptation studies. Costs of adaptation are difficult to issue on who should bear the investment costs for identify precisely because of the wide range of future CCA and investments, which was only touched upon, climate impacts and the many levels of adaptation will be crucial for future adaptation. To date, they require. Evidence is also limited on the costs of adaptation has been largely undertaken by the public CCA measures in terms of sectors and hazards, often sector, but given the adaptation finance gap, the because reports are internal, unpublished, or private sector and households clearly will need to Conclusion and Policy recommendations 125 contribute. Beyond methodological concerns, the cross-border level. The 2023 EEA report on adaptation public/private split of investments will require national progress has identified national adaptation networks, legislation and much more detailed adaptation panels, and committees as key to helping MS with studies. horizontal policy integration, multi-level coordination, scaling of adaptation actions, progress evaluation, National Adaptation Plans and supporting and coordination through knowledge networks.383 institutional processes can take into account These entities can review evidence regularly to inform adaptive management and iterative knowledge updates of NAPs and review progress on adaptation development. Generally, NAPs provide an extensive investment and remaining gaps. They can also be list of broad adaptation measures with actions that responsible for member state reporting to the EC on are feasible with current or slightly higher national adaptation progress, as required under the EU budgets (that is, early actions, including no-regret or Climate Law. Finally, these national coordinating low-regret measures, among them soft options), as entities can be connected to European and cross- well as actions that require more funding. NAPs can country expert networks to ensure they have access provide a basis for more detailed studies that take to the latest evidence from other countries on into account updated climate risks, extreme modeling, methodologies, climate risk analytics, and scenarios, cascading impacts or multi-hazard CCA costing. impacts, and cross-sectoral synergies. CCA studies allow for more specific costing of CCA measures The EU can enable the uptake of CCA costing within broader programs or investment portfolios, assessments. The practice of costing studies to identifying synergies and potential trade-offs and enhance the efficiency and effectiveness of CCA assessing the feasibility of measures with current or investments would confer broad benefits. Moreover, it increased budgets, therefore informing the would be valuable to have available databases of CCA prioritization of measures and their timing. This study options that can highlight potential no-regret actions showed how continually developed risk analytics and and provide benchmark costs and methodologies adaptation studies can help inform NAPs and implied and—whenever available—information on the po­ that it can be useful to include soft and research CCA tential benefits of CCA measures, taking into account measures in NAPs so that they are embedded with a that these tend to be very site- and context-specific. process of regular improvement of the evidence. Such databases could support quicker and more robust assessments and, in turn, improve the value of Both existing and new institutional actors can be adaptation expenditures. An information base of involved in shifting thinking on adaptation from its evidence on expected climate impacts, built from such being an environmental issue to a finance and sources as EUCRA, TRACE, PESETA IV, and rapid planning one, with responsibilities assigned across exposure and vulnerability assessments, and on all ministries. More broadly, such dialogue requires extreme scenarios can also be useful to EU Member coordination across ministries, agencies, and States. A menu of tools are already available for institutes and for policies influencing resilience such instance on managing climate risks.384 as spatial planning to be considered at national and 383 EEA. 2023c. Adaptation governance examples include: (i) reporting obligations or procedural rules; such as in Greece, Sweden (through the Swedish Meteorological and Hydrological Institute), Ireland, Romania (Inter-Ministerial Committee on Climate Change), Portugal (through the Climate Action Commission; (ii) technical or operational coordination; such as in Belgium, Croatia, France, Germany, Greece, Ireland, Slovenia and Spain (i.e., the Climate Change Office, with other national coordination and participation bodies tasked with adaptation issues); and (iii) NAS or NAP task force-like groups, such as in Estonia (national adaptation web portals), Denmark(thematic working groups), Czechia and Portugal (sector- related coordination). 384 EC. 2024. Managing climate risks - protecting people and prosperity. Section 3.2. Tools for empowering risk owners. Link. Conclusion and Policy recommendations 126 Finally, these databases and knowledge products scase-by-case basis, in detail and considering climate could support climate risk and adaptation risks. All these support mechanisms would aid assessments conducted to identify CCA measures implementation of the European Climate Law and the to feed into NAPs, as well as inform CCA costing Green Deal, including the EU Adaptation Strategy. and budget planning at the national and local levels. Further consideration of how to develop them, or They could be complemented by a network of experts provide support through existing or new mechanisms, who advise countries on the costing of CCA on a­ would be useful. The following is a summary of main challenges, limitations, and opportunities. KEY CHALLENGES AND LIMITATIONS WAYS TO MOVE FORWARD • Lack of information on projected impacts of climate • Continue investing in data collection at the national risks for the short to medium terms (2030s–50s), level. particularly to inform sectoral or investment portfolio • Provide incentive for adaptation studies at the national assessments and including consideration of extremes level. (wildfires, heatwaves, etc.) • Support capacity building on costing CCA across • Lack of comprehensive evidence on CCA costs Europe. • Difficulties of comparing costs of climate adaptation • Encourage the exchange of knowledge and lessons measures across countries due to use of different learned as well as the sharing of data and reports— methodologies even preliminary insights—on costing of CCA measures • Lack of knowledge on the benefits of CCA measures to enhance the evidence base. needed to enable prioritization and timing, as well as • Evaluate expenditures and budget plans to identify assessment of trade-offs among various measures adaptation gaps and track progress. • Complicated contextualized costing of CCA measures • Conduct further analytics on private versus public due to lack of analysis at sectoral level or for sector investment in CCA measures. investment portfolios, calling for creative solutions that have to be arrived at through a resource-intensive process based on a mixture of literature reviews, data, and information collected on national strategies • Lack of research on CCA measures supporting multi- hazard resilience Conclusion and Policy recommendations 127 ANNEX 1. Background and Overview of Findings on Climate Change Adaptation Costs BOX 15. CCA OBLIGATIONS UNDER EU CLIMATE LAW Regulation 2021/1119/EU imposes various obligations on adaptation (MSs shall regularly update the strategies); the EU institutions and the EU MSs, including CCA and obligations. Pursuant to Article 5, EU MSs shall: EU MS reporting obligations, pursuant to Article 19(1) of • Ensure continuous progress in enhancing adaptive Regulation 2018/1999/EU,76 on the national CCA planning capacity, strengthening resilience and reducing and strategies, outlining the implemented and planned vulnerability to climate change (Article 7 Paris actions to facilitate CCA, including reporting requirements Agreement74) agreed upon under the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris • Ensure adaptation polices are coherent and, mutually Agreement, as well as reporting on adaptation actions, supportive, provide co-benefits for sectoral policies, and including (a) the main goals, objectives, and institutional work toward better integration of CCA in a consistent framework for adaptation; (b) climate change projections, manner in all policy areas, including weather extremes, climate-change impacts, assessment of climate vulnerability and risks, and key • Adopt and implement national adaptation strategies and climate hazards; (c) adaptive capacity; (d) adaptation plans plans, (a) considering the EU Adaptation Strategy;75 (b) and strategies; (e) monitoring and evaluation framework, based on robust climate change and vulnerability comprising the state of play of the implementation of analyses, progress assessments, and indicators; (c) measures and reporting on funding, covering the spending guided by the best available and most recent scientific earmarked for CCA, including DRM, and to the extent evidence; (d) taking into account the particular possible, the share of spending to support CCA in each vulnerability of the relevant sectors; and (e) promoting sector; (f) progress made in implementation, including nature-based solutions and ecosystem-based good practices and changes to governance. Table 5 and Table 6 present the CCA costs found in categorized by the three ‘use cases’: national the literature. Table 5 summarizes the results and planning, sectoral planning, and programmatic methodologies of existing CCA cost assessments planning. undertaken for different European countries, 74 UNFCCC. 2015. Paris Agreement. Link. 75 EU. 2021c. Forging a Climate-Resilient Europe - the New EU Strategy on Adaptation to Climate Change. Link. 76 EU. 2023. Regulation 2018/1999/EU. Link. 128 Table 5. Overview of CCA costs at the national level found in the literature CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED NATIONAL PLANNING Short-term policy-first assessment Austria Knittel et al. • Top-down All climate The adaptation-relevant Two types of assessment: • CCA costs could vary greatly 2017 approach: hazards expenditure for the annual a. A top-down approach based on the depending on the approach transport, federal budget ranges from €358 federal government’s budget plan and methodology used even for innovation, and million (bottom-up approach the same country b. A bottom-up approach based on the technology; based on the Austrian 2012 Austrian national adaptation strategy • The two approaches cover agriculture, CCA strategy) to €488 million different aspects and types of forestry, and water (top-down approach based on adaptation and can be used in management; the federal government‘s 2016 complement to one another. environment budget plan) The top-down approach is • Bottom-top limited to existing measures, approach: while the bottom-up approach agriculture, can also assess new measures; forestry, the top-down approach biodiversity, focuses on grey measures, water, disaster while the bottom-up approach risk management, focuses on soft ones transportation • A bias toward investment infrastructure costs, costs for subcontracts, and cost of maintenance exists for the assessment France Depoues et al. 8 sectors (health, All climate €2.3 billion per year from 2022 to A two-stage analysis, which involves (a) Social consensus and public 2022 civil security, urban, hazards 2027 for the implementation of a qualitative definition of adaptation discussion could play an public infrastructure 18 ‘no regret’ measures needs and (b) a quantitative estimation important role in budgetary and networks, energy, of costs of actions planning and decision-making transportation, in CCA. forestry, water, and land resources) Alexandre et al. Overall economy All climate €55 billion expenditure in total; CCA estimation based on research and The study does not focus on CCA 2019 hazards at least €33.1–35.9 billion once tagging from the I4CE study for French but green budgeting, yet it is a favorable to the environment national budgeting77 good demonstration of using CCA and at least €25 billion once estimation from existing studies unfavorable as a basis of green budgeting and policy making. 77 Depoues et al. 2022. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 129 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED Sweden Government of Across sectors All climate €18.4 million (SEK 210 million) • Vulnerability and climate impact The study provides insights on Sweden 2007 hazards per year from 2007 to 2012 analysis based on two global climate CCA policy making and financing. (€22.8 million or SEK 260 million models and two global emissions It proposes CCA measures, if including a new subsidy for scenarios from the IPCC for three estimates the costs (total costs investments to protect against time frames (2020s, 2050s, and and detailed breakdowns), and natural disasters); €3.6 million 2080s) provides four possible financing (SEK 155 million) per year after options (which is valuable, as • CCA cost estimation based on 2012 the funding of CCA remains surveys and expert and institution challenging). consultation Romania Government of 13 sectors (water All climate Overall, CCA measures are • The measures proposed in the draft The approach showcases a Romania 2023 resources, forests, hazards estimated at approximately €19 NAP primarily took into account way to assess national-level biodiversity and billion across 13 key sectors, the allocations/financing available adaptation costs through ecosystem services, with €15 billion estimated for through European or international a combination of sectoral population, public CCA initiatives across a total of 6 funding mechanisms, targeting both perspectives. health and air selected key sectors from 2023 public funds and, where possible, quality, education to 2030. private funds. and research, • The amounts provided by the MEWF cultural heritage, in the NAP were based on both an urban systems, expert judgement and a summing agriculture and rural of the values of the financing lines development, energy, available (MEWF noting the list transport, tourism and of financing lines covered is not recreational activities, exhaustive). Based on this, a value industry, insurance) that was considered to be accessible and achievable for the authorities and the implementing stakeholders was proposed and included in the draft Action Plan. Bulgaria Republic of 9 sectors (agriculture, All climate Budget for each adaptation Project and activity-based cost Scoring adaptation options Bulgaria 2019 biodiversity and hazards option in the 9 sectors ranged estimation for the various adaptation according to different cost ecosystem, energy, from €0.003 million to €760 options purposed in the country’s categories (low, medium, high) forestry, human million and falls into one of the National Adaptation Strategy and instead of proving specific health, tourism, three cost categories: Action Plan, with detailed BCA numerical value as an alternative transport, urban • Low (L) undertaken for some adaptation way to present costs of CCA environment, water) (up to €1 million) options • Medium (M) (€1–100 million) • High (H) (€100 million and more) ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 130 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED Spain Government of 6 sectors (climate and All climate Overall, €1.5 billion from 2021 Sector and project-based cost The approach showcases a Spain 202078 weather, water, nature hazards to 2025 in 18 sectors and estimation for the various adaptation way to assess national-level and biodiversity, across measurement; largest options purposed in the country’s adaptation costs through coastal and marine expenditure includes water National Adaptation Strategy and a combination of sectoral environment, (€525.6 million), environment Action Plan and investment portfolio urban planning, and biodiversity (around €320 perspectives. transportation) million), coast and marine environment (€277.7 million), urban planning and construction (€205.7 million), and transportation (€114.6 million) Estonia Republic of 8 sectors (health, land All climate €43.7 million from 2017 to 2030 A top-down approach based on the The approach showcases a way Estonia, Ministry use and planning, hazards federal government’s budget plan for to assess national adaptation of Environment, natural environment, the implementation of the Development costs through budget forecasts 201779 bioeconomy, Plan for Climate Change Adaptation by sectors and by administrative economy, society areas. and cooperation, infrastructure and buildings, energy, and security of supply) Slovakia Republic of Across sectors All climate Around €3 billion Project and activity-based cost The cost estimate considers Slovakia 201880 hazards (2,958,319,881) from 2014 to estimation for the various adaptation adaptation actions taken both 2020, which covers budget for options purposed in the country’s at the national and international operation programs for national National Adaptation Strategy (cross-border) levels. development and cross-border and transnational cooperation programs Croatia Government of 11 sectors (general, All climate Around €3.6 billion (HRK 27 Sector and project-based cost The National Adaptation Strategy Croatia 202081 water, agriculture, hazards billion) for the period up to 2040, estimation for the various adaptation only provides a rough estimation; forestry, fishing, with more than half of the amount options purposed in the country’s more precise cost of measures biodiversity, energy, allocated to the implementation National Adaptation Strategy and activities can only be tourism, health, of structural measures, especially calculated in action plans and spatial planning, and in the agriculture, forestry, and implementation documents of risk management) water management sectors the Adaptation Strategy. 78 Government of Spain. 2020. Programa De Trabajo 2021 - 2025: Plan Nacional de Adaptación al Cambio Climático. Link. 79 Government of Estonia. 2017. Climate Change Adaptation Development Plan until 2030. Link. 80 Government of Slovakia 2018. 81 Government of Croatia 2020. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 131 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED UK Watkiss 202382 Across Sectors All climate €5.3–11.6 billion (£4.5–10 Rapid review of the potential adaptation No single, definitive cost of hazards billion) per year for this decade costs of Third UK Climate Change Risk adaptation for a country as it Assessment (CCRA3) risks depends greatly on the choice of methods and key assumptions. Medium and long-term science-first assessment Germany IÖW 2021; 2012 analysis: 2012 analysis: 2012 analysis: An integrated framework with three • Policy-oriented research Tröltzsch et al. 13 sectors (transport, 3 (extreme Overall ~ €140–142 billion different economic approaches: aiming at assessing the 2012 urban environment, heat, droughts, per year CCA costs until 2100 econometric modelling (with the economic consequences of finance, water and floods) (+ €260 per ha sustainable simulation and forecasting model climate change and adaptation and oceans, agriculture practices); specific PANTA RHEI), cost-benefit analysis to assist policy maker with building sector, costing for each of the 13 sectors (with innovative valuation approaches), the further development industry, health, and BCRs calculated and institutional analysis of climate of the German Strategy for soils, biodiversity, • Implement now (2012): ~ adaptation policy Adaptation to Climate Change agriculture, energy, €135–136 billion per year • Need to adopt different tourism, DRM) (+€260/ha sustainable approaches when assessing agriculture practices) CCA costs at different scales • Implement until 2050: (regional/national) + €2.6–3.3 billion per year • The modelling and approach • Implement until 2085/2100: show a way to endogenize the + €1.6–2.2 billion per year expected changes between the different actors of CCA by • 2021/2022 studies: modelling relevant industries No CCA costs published and economic sectors explicitly. 82 Watkiss 2023. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 132 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED Greece Bank of Greece Across sectors All climate €28 or €67 billion (in 2008 GDP • Quantitative assessment of the effect • Difficulty to purpose optimal 201183 hazards values) cumulative from 2011 of adaptation on Greek economy adaptation policy and assess to 2100 (based on 0% and 2% under high-intensity climate its costs due to a range of discount rate) scenario, with the use of the general projected climate impacts. equilibrium model GEM-E384 and • Only planned, public BCA adaptation measures are • CCA cost estimated as direct taken into account; adaptation expenditure for adaptation works and by the private sector is not interventions, with data from sectoral represented as exogenous analyses or international literature changes in the economic model. Government of 7 sectors All climate €123 billion cumulative until Sector-based cost estimation for the The approach showcases Greece 2016 (transportation, hazards 2100 various adaptation options purposed different ways to provide cost costal system, ocean, in the country’s National Adaptation estimates (for example, as Costs for the various adaptation forests, tourism, Strategy and Action Plan cumulative costs, annual costs, options in the seven sectors agriculture and or as percentage increase) between the two adaptation fishing, buildings and depending on the types of phases (2025–2050 and 2050– infrastructure) adaptation measures 2070) are estimated in one of the following three ways: • Cumulative cost between the two adaptation phases: €600 million–20 billion (2010 value) • Annual cost: €30–276 million (2010 value) per year • Cost as percentage increase (for the tourism sector): 10% increase 83 Bank of Greece 2011. 84 According to EC, GEM-E3 is “an applied general equilibrium model that covers the interactions between the Economy, the Energy system and the Environment. It is well suited to evaluate climate and energy policies, as well as fiscal issues”. See EC. 2023. GEM-E3. Link. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 133 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED SECTORAL PLANNING Spain Van der Wijst Across sectors Riverine flood, CCA expenditure is around 0.02% Projection of future adaptation Challenges to estimate CCA cost 202185 changes in of Spanish GDP, or 0.09% of expenditure (to 2050) based on an due to data availability: Not all agriculture and overall government expenditures aggregated list on past, current, information on the costs and forestry caused in 2019; €0.33 billion as and planned adaptation actions in types of past, current, and near- by climate additional public adaptation Spain provided by the Basque Centre future adaptation investments is changes expenditure in 2050 for Climate Change and existing available. assessments taken by national experts in adaptation Watkiss and Agriculture All climate Specific value for public Current and future projection • The study presents new Preinfalk 2022 hazards adaptation expenditure (until 2050) of public adaptation findings based on existing (investment, maintenance, and expenditures (investment, estimates of public adaptation operating costs) not mentioned maintenance, and operating costs) expenditures to inform based on COACCH results decision-making. • The cost-effectiveness of adaptation measures is highly site and context specific and depends greatly on the future projected climate change impacts. Austria Van der Wijst et 3 sectors (flood Riverine flood, €550 million in 2017 (latest year A top-down approach based on the Challenges to estimate CCA cost al. 2021 risk management, changes in available for the Austrian budget federal government’s budget plan, due to data availability: public forestry, and agriculture and report at the time of analysis); combined with the consultation of adaptation costs for Austria can agriculture) forestry caused €0.24 billion as additional public experts in the relevant ministries only be deduced from medium- by climate adaptation expenditure in 2050 term forecast for the federal change budget. 85 Van der Wijst et al. 2021. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 134 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED Austria Bachner et al. forestry All climate Cost pathways for adaptation Current and future projection • The study presents new 2019; Watkiss hazards estimated. In 2050, climate (until 2050) of public adaptation findings based on existing and Preinfalk change-induced annual GDP expenditures (investment, maintenance estimates of public adaptation 2022 losses in the impact scenario for and operating costs) based on COACCH expenditures to inform Austria are 0.15% from climate results decision-making. change and these losses can be • The cost-effectiveness of reduced by public adaptation to adaptation measures is highly only 0.06%. site and context specific and depends greatly on the future projected climate change impacts. • The importance to consider all types of adaptation interventions (structural, ecosystem based, informational). Nether­lands Van der Wijst et Across sectors Extreme €1.2 billion as additional public Project and investment-based Trade-off between the expansion al. 2021 riverine adaptation expenditure in 2050 modelling for the estimation of flood- of green adaptation and the (100-year flood) related expenses based on consultation agriculture and livestock flood, coastal sector (negatively impacted) flood risk may be a consideration when the government is choosing adaptation options. Watkiss and Disaster risk All climate Specific value for public Current and future projection • The study presents new Preinfalk 2022 management hazards adaptation expenditure (until 2050) of public adaptation findings based on existing (investment, maintenance, and expenditures (investment, estimates of public adaptation operating costs) not mentioned maintenance, and operating costs) expenditures to inform based on COACCH results decision-making. • The cost-effectiveness of adaptation measures is highly site and context specific and depends greatly on the future projected climate change impacts. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 135 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED UK Watkiss 2022 Agriculture, Wildfire • Climate adaptation costs BCA for different purposed adaptation • Effective preventive actions forestry, water, land estimated for a range of measures, with cost estimation based can take various forms; there management peatland adaptation options, on literature review and expenditure of is potential to explore climate- which vary across measures: existing measures smart designs and ‘soft’ prevention measures such • National training and capacity as early warning system and building program: around training programs. €1.59–7.6 million [£1.4–6.7 million] • Private and other co-benefits of adaptation may be • Wildfire management plan: underestimated in the case average implementation costs study, as the benefit is mainly of €200 (£175) per ha of land, measured in terms of reduced with a maintenance cost of €70 carbon and air pollution (£61) per ha and an update emission. cost of €40 (£35) per ha every five years PROGRAMMATIC PLANNING Nether­lands Jonkman et al. Land management Flood and sea €4.5–22.4 million per km per Review of current quantitative cost Aspects (for example, rural 201386 level rise m for defense (dike raising), assessment of existing adaptive coastal versus urban environment, €2.3–7.5 per m3 material for defenses measures (project-based adaptation of other [water] nourishment, €0.1 million per km assessment) infrastructures, and future per year for maintenance changes in materials and labor costs) that contribute to a nonlinear increase in the cost must be taken into account. Rijkswaterstaat Transportation Flood €1.2 million Flood risk exposure analysis based The methodology is easy to (Dutch Ministry on the assessment tools by the replicate and can be applied to of Infrastructure Climate Atlas and the ‘climate in the other road development projects. and Water development of the plan’ framework Management) with the KNMI climate scenarios88 202287 taken into account 86 Jonkman et al. 2013. Costs of Adapting Coastal Defenses to Sea-Level Rise: New Estimates and Their Implications. Link. 87 Rijkswaterstaat (Dutch Ministry of Infrastructure and Water Management). 2022. A27/A12: Adjustment Ring Utrecht. Link. 88 The Royal Netherlands Meteorological Institute (KNMI) is the Dutch national weather service and data and knowledge institution for climate science. The KNMI climate scenarios provides the likely changes in the future climate of the Netherlands. Each scenario provides a consistent picture of the changes in 12 climate variables, such as temperature, precipitation, sea level, and wind. See KNMI. 2015. Climate scenarios – pictures of the future. Link. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 136 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED Spain Meyer et al. Water, agriculture Drought €200 million adaptation cost, Quantitative, scenario-based (RCP4.5 Underestimated benefits (20% of 201589 which includes implementation and RCP8.5 climate change scenarios) projected avoided damage on the costs, market value of land, loss BCA and multi criteria analysis (MCA) environment were not estimated) of economic activity, conflict with analysis based on the Water Availability other users of the water district, and Adaptation Policy Assessment and environmental losses (WAAPA) model Water, agriculture, Heatwave • Green roof: the initial cost Quantitative, scenario-based (RCP4.5 • BCA is sensitive to the choice health, biodiversity ranged from €279 million and RCP8.5 climate change scenarios) of discount rate and socio- and ecosystem to €1.5 million and the BCA for two adaptation options: a green climatic scenario. maintenance cost over roof and a heat-health warning system • Challenging to evaluate costs 2020–2100 ranged from €98 and benefits of adaptation million to €2,029 million, under measures in monetary terms different discount rate and when the service is intangible climate scenarios. and when data availability is • Heat-health warning system: limited. the initial cost ranged from €0.4 million to €21.3 million and the additional cost ranged from €7.1 million to €12 million under different discount rate and climate scenarios. Scussolini et al. Urban space and land Flood €210 million for grey measures Project-based cost estimation for The study shows that the 201390 management and €0.03–10 million for soft different types of grey and soft implementation costs of soft measures infrastructures purposed in the regional measures are much lower than Flood Risk Management Plan (PGRI) traditional grey measures, which 2015–2021, based on a 500-year flood means soft measures should be return period considered as a potential option in Flood Management Plans at the local or national level. 89 Meyer et al. 2015. 90 Scussolini et al. 2013. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 137 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED Czech Water, land Flood Depending on the adaptation BCA of selected adaptation measures • The study aims at conducting Republic management option, the CCA costs vary from under current and future flood risks ‘real-world’ economic €0.21 million to €44.4 million (10-, 100- , and 1000-year return appraisals of investments in (CZK 5–1,043 million). periods) climate change adaptation and generalizing guidelines in assessing CCA costs and benefits for the EU context. • The assessment only considers hard adaptation measures due to the limitations of BCA . Climate-ADAPT Water, disaster risk Flood • €145.9 million (2013 value) Project-based BCA analysis, with costs The study proves that grey 201691 management for the implementation of grey of the grey infrastructures calculated measures are cost-effective to infrastructure, which includes for flood events with 20-, 50-, 100-, and provide city-wide protection from 500-year return periods floods. Yet it also suggests that • The implementation cost of the there is still potential to adopt flood control system: €144.4 green and blue measures on million; small streams. • The installation costs per flood event: €0.65 million; and • Annual maintenance and storage costs: €0.89 million Denmark EEA 2023a Urban and land Flood €2.68 billion (DKK 20 billion) Ex ante project-based BCA that The study shows the relatively management for the conventional solution compares the cost-effectiveness of low cost of green infrastructures (increasing the dimensions conventional and alternative adaptation in comparison to conventional of the sewerage system) and measures to inform investment decision solutions. Despite the result of €1.74 billion (DKK 13 billion) for the BCA, a hybrid solution was the alternative solution (green selected in the end. infrastructure) 91 Climate-ADAPT 2016b. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 138 CLIMATE OBJECTIVE AND LESSONS LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY HAZARDS LEARNED Poland Climate-ADAPT Water, disaster River flood €217 million for the Project-based BCA for the The project yields a BCR of 201892 risk management, implementation of a hybrid implementation of the hybrid 2.05, with benefit calculated in biodiversity, and adaptation measure (green and adaptation measure terms of avoided flood damage ecosystem grey infrastructure) to buildings. Nevertheless, the benefit is likely to be underestimated as the impact on people is not considered. European Transportation Floods, €64–74.4 million Vulnerability and risk assessment for The case study is a good Commission droughts, different climate scenarios and weather demonstration of how to 201893 and extreme conditions integrate CCA measures in early weather events (planning and designing) stages of a road infrastructure Croatia DBV 202394 Transportation Extreme €225.3 million Climate change impact study and The project demonstrates CCA temperature risk and vulnerabilities assessments proposals and cost estimation and weather under different climate scenarios with for airports, which are rarely events three types of climate change effects considered in existing adaptation considered planning case studies. Latvia EC 2018 Transportation Extreme €519 million Risk and vulnerability assessment The case study shows how temperature for the transportation system under climate change impacts and and weather current and future climate scenarios, adaptation can be considered events with the effect of different climate for existing infrastructure (for hazards modelled and corresponding example, when investing in adaptation measures purposed upgrading existing road network). Romania Transportation Floods, €2 billion Climate-induced risks and hazards The case study shows how to storms, and identification and risk assessment, implement CCA measures during meteorological then purpose corresponding adaptation two phases of a project: (a) events measures and make evaluations in the beginning phase where climate change effects need to be modelled and foreseen and (b) in the operation phase where adaptation options purposed are subject to operation costs. Source: World Bank based on sources as noted in the table. 92 Climate-ADAPT 2018. 93 EC 2018. 94 DBV. 2023. Project Dubrovnik Airport Development. Link. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 139 Table 6. Overview of CCA costs at the global, Europe, and regional level found in the literature Table 6 summarizes estimates of CCA costs at the global, EU, and sub-national scales based on existing literature. CLIMATE LEVEL REFERENCE SECTORS RANGE OF CCA COSTS METHODOLOGY OBJECTIVE AND LESSONS LEARNT HAZARDS Europe Jeuken et al. Agriculture, Floods Overall cost of adaptation in the Cost estimation of adaptation measures Adaptation cost estimates are 2016 health EU ranged from €26.89 billion to in three sectors (floods, agriculture, greatly affected by a range of future €47.06 billion [US$32–56 billion] health) represented by the AD-WITCH socioeconomic scenarios (differences (2005 values) in 2050 model95, with the climate scenario set between scenarios and sensitivity to at the calibration point (+2.5°C, around particular model assumptions). 2050) Europe Jeuken et al. Across River €700 billion for the 2030s and Cost estimation for river flood adaptation When the total costs were translated 2016 sectors floods €900–1,100 billion total costs measures in EU countries, with the use into annual costs, a lower cost for the 2080s (€13–15 billion per of a flood risk model that assesses the was found for the 2080s than the year for the 2030s and €9–11 changes in river flood risks in two future 2030s because the costs are spread billion per year for the 2080s) periods (2030s and 2080s), compared to over a shorter period and include the baseline (1980s) the upgrading costs of many flood protection systems across Europe up to a level of 100 years. Europe Jeuken et al. Agriculture All For RCP4 and RCP8 scenarios Cost estimation of two types The result shows that water 2016 climate under SSP2, SSP3, and SSP5: of adaptation measures (water management is a more effective hazards management and irrigation) under two adaptation strategy than irrigation, Cost of improved management emission scenarios (RCP4 and RCP8) as the effectiveness of irrigation is measures ranged from 0.002% and in two time horizons (short term and contingent on favorable climatic to 0.016% GDP for short-term long term), with the use of LAND USE conditions and water availability. (2040) time horizon and from and e CROP SHARE model 0.001% to 0.023% GDP for long- term (2070) time horizon Cost of irrigation measures ranged from 0.003% to 0.08% GDP for short-term (2040) time horizon and from 0.004% to 0.01% GDP for long-term (2070) time horizon 95 The AD-WITCH model is an energy-economy-climate model that aims at explicitly dealing with the main features of climate change, with a long term horizon covering all century until 2100. See Bosello, F., Carraro, C., & De Cian, E. 2018. APPENDIX I : THE AD-WITCH MODEL. In An Analysis of Adaptation as a Response to Climate Change (pp. 56–64). Copenhagen Consensus Center. Link. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 140 Europe Jeuken et al. Health Extreme Costs of heat-health warning Cost estimation based on the expected The estimation of heat-health warning 2016 heat systems from 2015 to 2099 costs per day of the alert system under system costs is subject to many (under RCP8.5 and SSP5 different climate scenarios, which uncertainties. scenario) is €323.7 million with include basic interventions (for example, 3% discount rate and €163.9 risk communication to the public and million with 5% discount rate basic emergency services) and extensive (2013 value) actions (for example, extra care to vulnerable people) Europe Rojas, Feyen, Whole Flood • For EU: €7882.1 million per Ensemble-based pan-European flood The project assesses the and Watkiss economy year for flood protection hazard assessment for present and socioeconomic impacts of river flood 201396 upgrade from current to future future conditions with the use of in the EU in the context of both climate 100-year flood event and an hydrological model LISFLOOD97. The and socioeconomic change, and it average BCR of 4 socioeconomic impacts are estimated reveals that future changes in the by combining flood hazard maps with socioeconomic dimension can be as • For countries: Adaptation costs information on assets. essential as future changes in climate- vary greatly across countries, induced disaster risks and thus need to with high costs found in be considered in the assessment. United Kingdom, France, Italy, Romania, Hungary, and Czech Republic Europe ClimateCost Across All Wide range of CCA costs for Literature review of 50+ existing • CCA cost estimation could 201198 sectors climate different sectors and Europe global European, sectoral, regional, vary greatly depending on the hazards as a whole based on different and national studies on the costs of methodological approaches, time economic and climate scenario adaptation in Europe frames, and climate scenarios used models in the assessments. • Existing sectoral assessments on adaptation costs have a very uneven distribution. Skourtos, Water Flood With cross-sectoral synergies Cost-effectiveness analysis (basic CCA costs could vary significantly Kontogianni, taken into account: €1,383– and under uncertainty) for different for (a) basic and under uncertainty and 3,847 billion adaptation measures leading to water analysis and (b) with and without Tourkolias savings due to technological changes cross-sectoral effects. Without cross-sectoral effects: 201399 without including cross-sectoral effects €401–10,559 billion 96 Rojas, R., L. Feyen, and P. Watkiss. 2013. “Climate Change and River Floods in the European Union: Socio-Economic Consequences and the Costs and Benefits of Adaptation.” Global Environmental Change 23: 1737–1751. Link. 97 LISFLOOD is a grid-based hydrological rainfall-runoff-routing model that simulates the hydrological processes that occur in a catchment. See JRC. 2022. LISFLOOD hydrological model Fact sheet. Link. 98 ClimateCost. 2011. The Costs and Benefits of Adaptation in Europe: Review Summary and Synthesis. ClimateCost Policy Brief. Link. 99 Skourtos, Kontogianni, and Tourkolias. 2013. Report on the Estimated Cost of Adaptation Options Under Climate Uncertainty. Link. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 141 Europe EC, DG- Across All Adaptation investment needs in Literature review of estimates of Under assumptions and CLIMA, sectors climate the EU estimates range from €35 adaptation investment needs in the EU methodological approaches, the 2017100 hazards billion to €500 billion annually and the landscapes of climate finance in estimation for CCA investment needs individual EU countries could vary significantly. Western EU 2017101 6 sectors All The estimated annual investment Estimation of the cost of adaptation as a • The study provides a solid framework Europe based on De (agriculture, climate needs for CCA range from €158 policy variable under two scenarios (base for examining adaptation cost issues Bruin, other hazards billion to €518 billion (2015 model and higher damage) with two IAM within more complex, modified IAMs. Dellink, and vulnerable value) for 2025–2185 models: the global Dynamic Integrated • The results of the study can be Agrawala markets, model for Climate and the Economy further improved by incorporating 2009102 coastal, (DICE) and its regional counterpart, the more detailed regional knowledge on health, Regional Integrated model for Climate the impacts of climate change and of non-market and the Economy (RICE) adaptation options. time use, catastrophic events, and settlement) The Müller, Vilà- Tourism, Wildfire The estimated adaptation cost A bottom-up estimation of CCA costs • The goal is to develop the first Alpine Vilardell, agriculture, for the integrated forest fire based on literature review, expert integrated fire management plan for Region and Vacik forestry, management measures is around consultation, and current adaptation the Alpine region, which combines 2020103 land uses €10 million per year. expenditure of 7 countries in the Alpine fire prevention, fire suppression, and region post-fire management. • It is crucial to consider both the costs of individual adaptation options and the total cost when developing integrated fire management plans. Global World Bank Across All • Estimated CCA costs global and Calculated existing and planned IFF and 2010 sectors climate for 7 case studies (developing then estimated the additional investment hazards countries) required for adaptation as a premium on existing and planned investments, based • Global adaptation costs range on a climate change scenario of 2ºC from US$70 billion to more above pre-industrial levels by 2050 than US$100 billion annually by 2050 100 Forster et al. 2017. Link. 101 EU. 2017. Climate mainstreaming in the EU budget: Preparing for the next MFF - final report. Link. 102 De Bruin, Dellink, and Agrawala 2009. Link. 103 Müller, Vilà-Vilardell, and Vacik 2020. Link. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 142 Europe ECONADAPT Across All Wide range of CCA costs for OCED Literature review of costs and benefits of • CCA cost estimation has progressed and 2015104 sectors climate countries, developing countries, adaptation at global, national, regional, in recent decades, covering a wide Global hazards EU countries, and different and local scales and for different sectors range of countries, sectors, and risks. sectors based on different • It is challenging to directly compare economic and climate scenario the results between studies models (especially for aggregate estimates) due to the diversity of approaches, assumptions, choice of climate and socioeconomic scenarios, discount rates, and so on. Source: World Bank based on sources as noted in the table. Note: Additional studies have been reviewed as mentioned below, but these only focused on the quantification of potential impacts of climate change rather than on climate adaptation costs and are not at the national scale (Europe and beyond). They have therefore not been included in the above table. These studies are EC, DG CLIMA, 2021105 (review of methodologies and limitations for costing CCA); ICLEI 2017106 (definition of costing frameworks at the urban scale for adaptation measures focusing on typologies of buildings and infrastructure in terms of climate impacts); World Bank 2022107 (climate impact assessment in Türkiye and adaptation action proposal); Botzen et al. 2010108 (downscaled assessments of risks and costs of climate in Europe and for three case studies, literature and methodology review, CGE model described and then applied in Knittel et al. 2020109 and Bachner et al. 2019110); UNECE 2020111 (climate change impacts for transport networks and nodes in Europe and Canada); Impressions 2019112 (impact assessment for 4°C and more and the options available for reducing the risks for various sectors; stress testing of policies and strategies); Forzieri et al. 2018113 (analyze additional investments needed to climate-proof critical infrastructure such as transport against multiple hazards based on literature-based vulnerability assessments); TopDad 2016114 (socioeconomic tool to develop sectoral CCA strategies considering regional climate scenarios and demonstrated for selected case studies); Impact2C 2015115 (climate impact assessment under 2°C warming for Europe for several sectors); Krausmann et al. 2019116 (climate impact assessment of a power grid considering flood risk; scenario-based approach). 104 ECONADAPT. 2015. The Costs and Benefits of Adaptation: Results from the ECONADAPT Project. Link. 105 Ebrey et al. 2021. 106 ICLEI. 2017. RAMSES - Science for Cities in Transition. Link. 107 World Bank. 2022c. 108 Botzen, W., et al. 2020. D3.4 Socio-Economic Tipping Point Analysis. Deliverable of the H2020 COACCH Project, Research consortium. Link.  109 Knittel et al. 2020. “A Global Analysis of Heat-Related Labour Productivity Losses under Climate Change—Implications for Germany’s Foreign Trade.” Climatic Change 160 (2): 251–269. 110 Bachner et al. 2019. “How Does Climate Change Adaptation Affect Public Budgets? Development of an Assessment Framework and a Demonstration for Austria.” Mitigation and Adaptation Strategies for Global Change 24 (7): 1325–1341. 111 UNECE. 2020. Climate Change Impacts and Adaptation for Transport Networks and Nodes. Link. 112 Impressions. 2019. Impressions: Impacts and Risks from High-End Scenarios: Strategies for Innovative Solutions. Link. 113 Forzieri et al. 2018. “Escalating Impacts of Climate Extremes on Critical Infrastructures in Europe.” Global Environmental Change 48: 97–107. Link. 114 TopDad. 2016. TopDAd - Next Generation Toolset. Link. 115 Impact2C. 2015. IMPACT2C - Quantifying projected impacts under 2°C Warming. Link. 116 Krausmann, E., L. Feyen, L. Alfieri, et al. 2019. Climate Change and Critical Infrastructure: Floods. Publications Office. JRC. Link. ANNEX 1. Background and Overview of findings on Climate Change Adaptation Costs 143 ANNEX 2. Overview of Methodologies for Climate Change Adaptation Costing Table 7. Overview of methodologies with their advantages and disadvantages METHODOLOGY DESCRIPTION DESCRIPTION EXAMPLE REFERENCES MODELLED/ECONOMIC-BASED APPROACH (TOP-DOWN) Sector integrated - Main source of cost of adaptation estimates in the + Strong theoretical basis EC study (BASE), Jeuken et al. 2016. assessment/damage costs literature + Objective to make rational CCA Austria (PACINAS, COIN), Global (DIVA COIN 2022. - Involve the use of sector models (global, regional, investments national, local) to assess future climate change model) Brown et al. 2021. + Address future climate change impacts and then technical adaptation responses scenarios and ranges of (and associated costs and benefits) projected climate impacts - Used commonly for coastal and river protection and - Highly stylized CCA analysis agriculture (neglects adaptive capacity, process of CCA, and policy IAMs - Combine the scientific and economic aspects of EC (ECONADAPT, EconAdapt 2015. context) climate change within a single, integrated analytical NAVIGATE, framework - Focused on technical options 7FWP project EC 2022. - Can quantify the economic impacts of climate - Centered on 2050s horizon ‘ClimateCost’) Watkiss 2009. change and, in some cases, the costs and benefits of (no short-term information/ adaptation, albeit in a stylized form immediate needs and finance needs and costs for CCA - Primarily applied at the global level but also used to + not aligned with 5-year downscale results to regions/countries reporting periods Paris/National CGE - Macro-economic models that allow analysis of how Adaptation Plans) EC (JRC PESETA, Juan-Carlos Ciscar et al. 2019. modelling impacts cascade across sectors of the economy as - Static (if-then) approach COACCH), well as price effects to capture the spectrum of COACCH 2019. projected climate change USA (the American - Often use sector impact and adaptation studies as Climate Prospectus Watkiss and Watkiss 2021. inputs impacts, one scenario at a time; if addressed with DMUU project), Austria, Bednar-Friedl et al. 2017. approaches in recent literature, Bulgaria, Germany Republic of Bulgaria 2019. it involves more complexity, time, and resources and primarily Macro-structural modelling Structural models presenting the flows of funding at applied at the project level World Bank CCDR World Bank 2022a. macroeconomic level by mapping out main economic Studies (Türkiye, variables in national accounts, balance of payments, Pakistan, Nepal), World Bank 2022b. labor markets, and financial sectors. They generally are International World Bank 2022c. consistent with both economic theory and the dynamics Monetary Fund (IMF) of real-world economy. study Parry et al. 2018. Econometric modelling Use econometric (statistical) analysis of current climate Germany, Stoever et al. 2022. and economy links and use these relationships to look at future climate impacts and in some cases adaptation AFDB study, Africa Development Bank 2019. Pakistan (World World Bank 2022b. Bank CCDR) ANNEX 2. Overview of Methodologies for Climate Change Adaptation Costing 144 METHODOLOGY DESCRIPTION DESCRIPTION EXAMPLE REFERENCES INVESTMENT NEEDS/PROGRAM OR PROJECT-BASED APPROACH (BOTTOM-UP) Sector, program, project, - Approach dominates the international costs of + Relatively simple to complete EC study (BASE, • UNFCCC 2011. and activity-based costing adaptation reported by developing countries as part of + Provide practical information EconAdapt, Climate- their submissions to the UNFCCC and for adaptation ADAPT), World • BASE 2015. on near-term actions to inform finance needs. adaptation finance needs and Bank and EC study, • EC 2016. early implementation Austria, • Climate-ADAPT 2023c. - Partial capture of challenges with estimating CCA costs • World Bank and European Commission 2021. - Typically, long lists of identified activities • Knittel et al. 2017. IFF analysis - Focus on the likely costs of planned adaptation. - Usually based on an estimate UNFCCC study, • UNDP 2022. - Based on analysis of current financial flows, now of costs of activities (that is, France • UNFCCC 2007. and in the future, and apply an adaptation mark-up national program of climate- to these. An example is the UNDP Assessment of smart agriculture) rather than a • I4CE 2022. Investment and Financial Flows (IFF) to Address result of analysis/appraisal Climate Change (UNDP 2011), which provided - Lack of strategic approach national/sector estimates in 15 countries. (focus on short-term programs Variation of IFF Analysis of adaptation costs (and benefits) based on or project priorities and direct UNDP study, Austria, • UNDP and ODI. 2012. climate budget tagging/Climate Public Expenditure government interventions rather France, Bangladesh, and Institutional Reviews (CPEIR) studies, aligning to than implementation costs, Nepal (UNDP) • Knittel et al. 2017. national development planning enabling conditions and so on) • Alexandre et al. 2019. - Rarely considers economic efficiency considerations that is, • Bangladesh 2021. benefits of CCA (that is, reducing • UNDP 2018. climate change impacts), Decision support tools - Decision support methods that can be used for EC study (Climate- • Climate-Adapt 2020. adaptation effectiveness, adaptation, to identify priorities, and which generate ADAPT), Netherland analysis of costs and benefits of • Doukas and Nikas 2019. cost estimates CCA, or appropriate level and - Suite of standard decision support tool, with the scale of CCA • Government of the Netherlands use of cost-benefit analysis, cost-effectiveness 2022. - Rarely consider longer-term analysis, which are often suitable for no- or low-regret horizons and a range of projected adaptation but do not account for a range of projected climate impacts climate impacts - Include activities associated with - More commonly used for project appraisal rather than the existing adaptation deficit producing national estimates and broader developments (broad climate rationale) Decision-making under EC study (Climate- • Climate-Adapt 2023b. uncertainty Adapt), IPCC studies • Kunreuther et al. 2014. • Moure et al. 2023. Source: World Bank based on sources as noted in the table. ANNEX 2. Overview of Methodologies for Climate Change Adaptation Costing 145 Table 8. Overview of methodologies and approaches used for case studies NEW CASE STUDY/ ECONOMIC MODELS/ DISASTER ANALYTICS FOR NEW CASE CASE STUDY FROM OVERALL METHODOLOGY EXPECTED RESULTS ASSESSMENTS STUDIES UNDER THIS REPORT LITERATURE Bulgaria; Austria, Sector, program, project, and Bottom-up CCA Results from CIMA fire modeling and Costing and informing prioritization of France, UK (external) activity-based costing. Hybrid costing approach heat analytics measures for 2030s and 2050s considering approach using adaptation current and future selected climate risks in a measure portfolios cross-cutting manner Croatia, Aurelia IFF analysis Investment-focused Results from CIMA fire modeling and Identifying investment mark-ups required to (fictional), costing; BCA heat analytics, seismic, and energy climate-proof selected infrastructure to inform Netherlands efficiency analytics117 smart prioritization and decision-making (external) Sweden; UK, Decision support tools Sectoral based Current and future wildfire risk Costing investments for a portfolio of CCA Germany, Norway assessment; BCA analytics and economic analysis of measures to tackle wildfire risk in the forestry (external) costs of wildfires sector Romania; Sector integrated Criticality analysis Flood risk and impact assessments for Sectoral impact assessments to consider in based on vulnerability future climate scenarios and high-level macro-models and for detailed sector-based Serbia, assessment/damage costs assessment and costs economic cost analytics CCA costing Türkiye (external) of interventions for the transport sector Romania; CGE and/or macro-structural Macroeconomic Results from sector integrated Determining high-level net benefits of models modelling based on assessments and damage and cost investing in adaptation from the perspective of Austria, high-level costs of analysis of selected hazards (floods, the Ministry of Finance Germany, interventions and heat, wildfire, and drought) benefits; MFMod (from Spain (external) World Bank) and CGE models Source: World Bank. 117 World Bank and European Commission, forthcoming. ANNEX 2. Overview of Methodologies for Climate Change Adaptation Costing 146 Table 9. Overview of type of data and modelling results used for case studies COUNTRY CASE TYPE OF DATA SOURCE TYPE OF ANALYSIS TYPE OF CCA COSTING ANALYSIS INFORMED STUDIES WILDFIRES Bulgaria Historical data on EFFIS (previous number of events and burnt area) Initial analysis of trends; Sector, program, project, and activity-based fire occurrence historical economic costs costing Romania National data from CP and/or forestry agencies (burnt of wildfires area by land types) IFF analysis Sweden Decision support tools Croatia Sector integrated assessment/damage costs Bulgaria Historical data on EFFIS (air pollution from fires) Simple first assessment of Sector, program, project, and activity-based fire impacts societal costs of wildfires costing Romania National data from CP and/or forestry agencies, mostly collected for extreme events (for example, carbon Decision support tools Sweden emission costs, suppression costs, property and Sector integrated assessment/damage costs Croatia infrastructure damages, and so on) Bulgaria Wildfire risk JRC Pan-European Wildfire Risk Assessment - risk maps Detailed wildfire risk Sector, program, project, and activity-based indexes analytics for current costing Romania Exposure maps based on EC/OSM data and pan- (current climate) climate at high resolution European fire danger layers IFF analysis Croatia Detailed assessment of susceptibility, hazard, risk, and Decision support tools social vulnerability-based on national data and results Sector integrated assessment/damage costs from modelling by CIMA (vulnerability assessment) Bulgaria Wildfire risk PESETA IV, IPCC, national climate risk assessments Detailed wildfire risk - Sector, program, project, and activity- indexes (background) analytics for future based costing Romania (future climate) climate at high resolution Bias-adjust future climate projections from Inter- - IFF analysis Croatia Sectoral Impact Model Intercomparison Project phase 3 - Decision support tools (ISIMIP3b) and comparison with EURO-CORDEX/RCMs - Sector integrated assessment/damage Detailed assessment of susceptibility, hazard, risk, and costs social vulnerability based on national data and results from modelling by CIMA (vulnerability assessment) ANNEX 2. Overview of Methodologies for Climate Change Adaptation Costing 147 COUNTRY CASE TYPE OF DATA SOURCE TYPE OF ANALYSIS TYPE OF CCA COSTING ANALYSIS INFORMED STUDIES HEAT Bulgaria Historical data on Daily all-cause mortality for Sofia from 2010–2019 Model calibration Sector, program, project, and activity-based heat events from the National Statistical Institute (Bulgaria) or setting the costing (example of benefits quantification Romania context/baseline for for adaptation measure portfolio) Daily climate variables for Sofia from 2010 to 2019 macro analysis (Romania) from the Executive Environment Agency Historical heat impacts for Romania and urban heat analytics from CCDR Bulgaria Extreme heat National disaster risk profile of Bulgaria: Daily maximum Heat-attributable deaths, Sector, program, project, and activity-based days 2020-2050, temperature and relative humidity of the climate model labor productivity losses costing (example of benefits quantification Romania RCP4.5 (future) MOHC-HadGEM2-ES/SMHI-RCA4 (RCP4.5 simulation) (Bulgaria) and to use in for adaptation measure portfolio) from the Copernicus Climate Change Service macro analysis (Romania) Bulgaria: Heatwave data from Copernicus Climate Change Service Romania: Daily maximum temperature and relative humidity of the climate model MOHC-HadGEM2-ES/ SMHI-RCA4 (RCP4.5 simulation) from the Copernicus Climate Change Service FLOODS Romania Flood risk RO-Floods Technical Assistance Project, JBA (2021), Baselining, flood hazard, IFF analysis (current) Flood Risk Analysis for EU MSs, European Commission, vulnerability and risk (2021), Current Practice in Flood Risk Management in mapping the European Union Results from transport network analytics (CCDR); Feyen et al. (2021) Romania Flood risk (future) RO-Floods Technical Assistance Project, JBA (2021), Risk analytics for IFF analysis Flood Risk Analysis for EU MSs, European Commission, transport network (2021), Current Practice in Flood Risk Management in the European Union Analytics for transport network (simplified approach) Source: World Bank. ANNEX 2. Overview of Methodologies for Climate Change Adaptation Costing 148 ANNEX 3. Details on Costings of CCA Measures in Case Studies Bulgaria Table 10. Overview of CCA measures costed addressing extreme heat risks in selected sectors MEASURE DESCRIPTION MAIN KPIS ADAPTATION MEASURES PORTFOLIO: HEALTH NHHAP NHHAP’s objective is to prevent and lessen the impact of heat on people’s health and well-being. It includes a Heat-related mortality and morbidity; set of strategies related to heat early warning system; actions to prevent negative health effects of heat targeted number of people reached (HEWS); Measure type: at the general public and specific vulnerable groups, including preparedness of the health and social care demand for emergency and health low regret system; communication plan to raise awareness and improve preparedness in stakeholders and citizens; and care services governance structures to coordinate actions and collaborations. HEWS Improvement on the existing general early warning system in Bulgaria, to consider impact-based triggers Heat-related mortality and morbidity; based on meteorological and epidemiological parameters to forecast heat events and their health impacts. number of people reached (HEWS); Measure type: Enhancements are to be made along the service delivery value chain, which includes foundational modeling, demand for emergency and health low regret forecasting and multi-tier alert system, targeted communication and training, and end user uptake. HEWS care services; productivity should have two communication channels: one for the general public and one targeted at the health sector (and other institutional stakeholders) and vulnerable populations. Data collection A national heat-related illness and mortality data collection system would allow to collect heat-related health Heat-related mortality and morbidity; system for heat- data in real time across Bulgaria. The system could also collect reliable temperature data in health care buildings. demand for emergency and health related illness and The objectives of such a system are to understand real-time effects of heat events on human health; allow the care services mortality health care system to prepare and manage health services during heat events through early detection, real-time monitoring, and alerts; and investigate the relationship between heat and morbidity and mortality across different Measure type: regions of Bulgaria. Such a system is typically a part of the syndromic surveillance system set up across many low regret health care facilities, which allows to determine how many people who visit the emergency room are being affected by certain health conditions in real time. The system also acts as a platform for central collection and exchange of information between institutions involved in forecasting and responding to heat events. Establishment of Cooling centers are designated public facilities that help prevent heat-related illnesses or deaths in extreme Heat-related mortality and morbidity; cool centers heat events. Such facilities provide cool places of public refuge and can include museums, libraries, churches, demand for emergency and health shopping centers, shaded areas, swimming pools, and other publicly accessible infrastructure. Cooling centers care services Measure type: can also provide drinking water, power in case of a power outage, and other resources. The distribution of low-regret/ cooling centers in cities should aim to minimize the maximum walking distance to the centers. early adaptation activities ANNEX 3. Details on Costings of cca Measures in Case Studies 149 MEASURE DESCRIPTION MAIN KPIS Design of new This measure includes (a) passive design techniques to minimize heat gain and maintain comfortable indoor Heat-related mortality and morbidity; health care temperatures by, for example, orienting the building to maximize shade and natural ventilation, using high- building overheating (comfort level) facilities for heat performance insulation and glazing materials, incorporating thermal mass for temperature regulation, and resilience increasing the albedo of hard standing surfaces; (b) design for efficient cooling systems to ensure effective temperature control and ventilation within the facility; (c) innovative green roof and façade solutions to mitigate heat by reducing the urban heat island effect, improving insulation, and promoting evaporative cooling— Measure type: furthermore biophilic design absorbs solar radiation and releases moisture through transpiration, creating a climate smart cooling effect for the building and its surroundings; and (d) thermal comfort optimization via the selection of appropriate materials, that is, heat-resistant materials, high solar reflectance, and high infrared emittance and provision of appropriate ventilation systems and shading devices. Heat resilience Can include insulation measures, solar control measures, ventilation modification measures, and measures Heat-related mortality and morbidity; improvements of in the external environment. Specific focus can be placed on, for example, (a) enhancing building design via building overheating (comfort level) existing health retrofitting health care facilities with heat-resistant materials, high solar reflectance, high infrared emittance, care facilities external and internal shading, insulation and cool roofs to help reduce heat absorption and maintain lower indoor temperatures, improving/increasing natural ventilation to enhance airflow, air-conditioning, and high- Measure type: performance glazing; (b) upgrading cooling system and implementing energy-efficient cooling systems; and climate smart (c) green, blue, grey, and hybrid infrastructure via incorporating green spaces to provide natural shade, green roofs, biophilic design; improve air quality; and reduce the urban heat island effect while integrating blue infrastructure, such as water features and permeable surfaces, to aid in cooling and contribute to a more resilient environment. Information Increasing public and stakeholder awareness of heat-related risks and the respective mitigation actions required Heat-related mortality and morbidity; campaigns and and available tools through the following: number of people reached (HEWS); awareness raising demand for emergency and health Multi-level information campaigns with tailored messaging for different target audiences across multiple care services Measure type: channels, including mass media, social and other digital media (for example, dedicated smartphone low regret applications), printed information materials, mid-media activities, and in-person communication such as public talks, events, discussion groups, and so on with support from community leaders. Integrated trainings for institutions and stakeholders, including state-funded volunteer organizations, to improve inter-institutional coordination and to streamline dialogue with the public. Information campaigns and programs specifically targeted at vulnerable groups. This includes programs that extend beyond the HEWS that are intended to provide vulnerable groups with additional support. Populations vulnerable to heat generally include the elderly (over 65 years), infants and children, people with chronic illness and on certain medications, the socially isolated, the homeless, low-income households, and outdoor workers. This measure can include peer-to-peer support programs and information services targeted at specific groups. ANNEX 3. Details on Costings of cca Measures in Case Studies 150 MEASURE DESCRIPTION MAIN KPIS ADAPTATION MEASURES PORTFOLIO: PRODUCTIVITY AND COMFORT Labor force Heat stress increases workers’ occupational health risks and can restrict physical functions and capabilities, Heat-related mortality and morbidity heat protection work capacity, and productivity. Labor heat protection strategy outlines coordinated actions and measures including heat stress, heat stroke; strategy at the governmental, employer, and individual levels that reduce health risks and productivity losses. The productivity strategy should include occupational safety and health standards, measures to improve labor early warning, Measure type: guidelines on ensuring adequate adaptation measures (for example, hydration, rest breaks in the shade), and low-regret/ personal cooling strategies and shifting work hours to cooler parts of the day. Heat stress labor regulations can early adaptation vary from prescribing maximum temperatures to which workers may be exposed to less prescriptive national activities legislation that requires employers to provide (at a minimum) a safe place of work and identify and control risks and hazards. The effect and trade-off of shifting labor hours should also be investigated and considered in the strategy, with particular attention to the most affected sectors such as agriculture and construction. Urban heat island This measure includes identification of cities that are or will be at risk of UHI effect in the upcoming decades. Heat-related mortality and morbidity; strategy at city These cities have an increased risk to extreme heat and will require city-level strategies to mitigate the additional demand for emergency and health level negative impacts. The development of UHI strategies should include local mapping of UHI effects (similar to that care services; UHI index; air of Sofia city) to understand the most impacted and vulnerable areas, for prioritized actions. The UHI strategy quality; cooling degree days (energy Measure type: should include heat adaptation options and actions at the city, local, and individual levels, which can take consumption); building overheating early adaptation different forms (hard and soft, physical implementations, policy reforms, and new programs). (comfort level); building overheating activities Improved access This measure includes ensuring the accessibility and connectivity of public transport, introducing requirements Productivity; transport overheating to cooled public for air conditioning and reflective window materials in public transport vehicles, and implementing measures to transport reduce temperatures at public transport stops and stations as outlined in the measures below. Measure type: climate smart Building This measure includes the following: (a) develop climate-responsive design including optimizing building Heat-related mortality and morbidity; standards for new orientation and spatial planning, utilizing shading devices, incorporating natural ventilation systems, and demand for emergency and health development integrating green and blue spaces to mitigate heat buildup and enhance thermal comfort via, for example, care services; UHI index; biophilic design; (b) prescribe heat-resistant materials with high solar reflectance and low thermal conductivity Measure type: air quality; cooling degree days which thereby help reduce heat absorption, minimize heat transfer, and maintain lower surface temperatures; climate smart (energy consumption); building (c) design energy-efficient cooling systems such as high-efficiency air conditioning units and heat pumps, to overheating (comfort level); building provide effective cooling while minimizing energy consumption, and furthermore consider smart and responsive overheating cooling technologies that adjust operation based on occupancy and temperature conditions; (d) design urban heat island mitigation strategies to create a more comfortable microclimate and reduce the overall heat stress on buildings and infrastructure, for example, green roofs, cool pavements, and urban greening; and (e) enhance water management and conservation via incorporation of water-efficient landscaping, rainwater harvesting systems, and permeable surfaces to reduce stormwater runoff and manage water resources effectively. ANNEX 3. Details on Costings of cca Measures in Case Studies 151 MEASURE DESCRIPTION MAIN KPIS Building Include the above considerations for retrofitting the building stock as part of low-income household energy Heat-related mortality and morbidity; improvements of efficiency and heat resilience improvement programs/part of implemented initiatives such as demand for emergency and health existing buildings care services; UHI index; The BGN 2 billion state-funded National Programme for Energy Efficiency of Multi-Family Residential Buildings (2015–2023) and its planned BGN 1.13 billion successor program under the EU’s Recovery and Resilience Plan air quality; productivity; cooling degree and days (energy consumption); building Measure type: overheating (comfort level); building climate smart Other EU, national, and municipal public investment programs for retrofitting of existing infrastructure. overheating; green and blue spaces (proxy for ambient cooling and outdoor comfort) Urban greening Creating and preserving blue-green ‘arches’ and public spaces is a relatively simple and effective way to lower UHI index; air quality; cooling degree and blue solutions surface and air temperatures. Specific measures include days (energy consumption); building overheating; green and blue spaces Measure type: Using urban greening solutions such as increasing the number of trees and other plants, particularly in strategic (proxy for ambient cooling and outdoor climate smart locations around buildings, streets, and parking lots (including by using cost-effective permeable green-gray comfort) parking surfaces); Improving the integration of rivers and green spaces into the urban fabric; Constructing decorative as well as drinking water fountains; and Implementing short-term measures during extreme heat events such as using water to cool streets and public spaces. Source: World Bank. ANNEX 3. Details on Costings of cca Measures in Case Studies 152 Table 11. Overview of costs of CCA measures addressing extreme heat risks in selected sectors TOTAL 5-YEAR TOTAL NPC FOR MEASURE SUMMARY OF ACTIVITIES AND COSTS KPIS RELEVANT TO THE MEASURE BUDGET OUTLOOKB 2023–2050C ADAPTATION MEASURES PORTFOLIO: HEALTH NHHAP Development of the NHHAP: €50,000 (5-year)/€176,000 (NPC) €26.7 million €86.1 million Heat-related mortality and (excluding HEWS morbidity; number of people Measure type: Implementation of NHHAP includes the following: (excluding HEWS and information reached (HEWS); demand for low regret and information Heat early warning system: costed as part of HEWS CCA measure campaign, emergency and health care campaigns, which are costed services Actions to prevent negative health effects of heat, targeted at which are costed separately) the general public and specific vulnerable groups, including separately) preparedness of the health and social care system: €26.0 million (5-year)/€83.8 million (NPC) Communication plan to raise awareness and improve preparedness in stakeholders and citizens: costed as part of information campaigns and awareness raising CCA measure Governance structures to coordinate actions and collaborations: €700,000 (5-year)/€2.19 million (NPC) HEWS HEWS implementation costs: €167,000 (5-year and NPC) €1.63–2.81 million €5.18–9.90 million Heat-related mortality and (average €2.15 (average €7.28 morbidity; demand for Measure type: Annual operating costs: €963,000 (5-year)/€3.01 million (NPC) million) million) emergency and health care low regret Variable costs for heatwave events (considering RCP8.5): services €0.50–1.68 million, average €1.02 million (5-year)/€2.00–6.72 million, average €4.10 million (NPC) Data collection system for System implementation cost: €133,000 €0.41 million €1.17 million Heat-related mortality and heat-related illness and morbidity; demand for Annual operating cost: €273,000 (5-year)/€854,000 (NPC) mortality emergency and health care Periodic system upgrade and enhancements: N/A services Measure type: (5-year)/€179,000 (NPC) low regret Establishment of cool Considers between 1,240 and 1,826 facilities €1.11–1.64 billion €1.81–2.67 billion Heat-related mortality and centers (average €1.38 (average €2.24 morbidity; building overheating Upgrade of 60% of facilities’ cooling systems over a 10-year billion) billion) (comfort level) Measure type: period: €1.11–1.64 billion (5-year)/€1.81–2.67 billion (NPC) low-regret/early adaptation Training of personnel for support during heatwaves: activities €0.74–1.10 million (5-year)/€2.33–3.43 million (NPC) ANNEX 3. Details on Costings of cca Measures in Case Studies 153 TOTAL 5-YEAR TOTAL NPC FOR MEASURE SUMMARY OF ACTIVITIES AND COSTS KPIS RELEVANT TO THE MEASURE BUDGET OUTLOOKB 2023–2050C Design of new health care Considers 20% obsolescence/attrition of existing health care €72–154 million €315–675 million Heat-related mortality and facilities for heat resilience stock (hospitals and clinics) over the time horizon (average €113 (average €495 morbidity; building overheating million) million) (comfort level) Measure type: Assumed that current portfolio level is maintained. This may be climate smart adjusted to allow for changes in population and demographics over the period considered. Costs presented considering, for example, (a) lower estimate of design for heat resilience allowing for, for example, sealed mechanical ventilation installed and maintained plus sealed glazing, and (b) upper estimate for cost allowing for premium for, for example, advanced natural ventilation system and energy efficient cooling system, provision of heat resistant materials, external and internal shading, high performance glazing plus green, blue, and hybrid solutions. Marginal costs can be estimated from the ranges presented. Heat resilience Considers 10% of existing healthcare stock retrofitted per €448–961 million €1.97–4.22 billion Heat-related mortality and improvements of existing 5-year cycle over time horizon (that is, to 2050). By 2050 60% (average €705 (average €3.1 morbidity; building overheating health care facilities of stock retrofitted. million) billion) (comfort level) Measure type: Considered stock includes 242 hospitals and 134 clinics as climate smart detailed in EU regional shared risk datasets. Assumed that current portfolio level is maintained. This may be adjusted to allow for changes in population and demographics over the period considered. Costs presented considering, for example, (a) lower estimate of design for heat resilience allowing for, for example, sealed mechanical ventilation installed and maintained plus sealed glazing and (b) upper estimate for cost allowing for premium for, for example, advanced natural ventilation system and energy efficient cooling system, provision of heat resistant materials, external and internal shading, high performance glazing plus green, blue, and hybrid solutions. Marginal costs can be estimated from the ranges presented. ANNEX 3. Details on Costings of cca Measures in Case Studies 154 TOTAL 5-YEAR TOTAL NPC FOR MEASURE SUMMARY OF ACTIVITIES AND COSTS KPIS RELEVANT TO THE MEASURE BUDGET OUTLOOKB 2023–2050C Information campaigns and Multi-level information campaigns for the public: €0.37 million €2.58–4.41 million €8.06–13.77 Heat-related mortality and awareness raising to €0.68 million annually (average €3.49 million (average morbidity; number of people million) €10.92 million) reached (HEWS); demand for Measure type: Programs specifically targeted at vulnerable groups emergency and health care low regret (establishment of support call center): €0.05 million to €0.09 services million annually Integrated capacity building trainings at national and regional level for institutions and stakeholders: €0.09 million to €0.12 million annually ADAPTATION MEASURES PORTFOLIO: PRODUCTIVITY AND COMFORT Labor force heat protection Strategy development: €50,000 €50,000 (strategy €176,000 (strategy Heat-related mortality and strategy development only, development only, morbidity including heat stress, GDP losses due to reduction of labor during extreme heat not considering not considering heat stroke; productivity Measure type: events: enforcement costs enforcement costs low-regret/early adaptation Estimates from previous studies: and losses due to and losses due to activities For 2020, €17.1–267.6 million (average €75.8 million) reduced labor) reduced labor) For 2050, €0.13–1.96 billion (average €0.50 billion) COACCH study: For 2020, €9.84 million Urban heat island strategy Considers a requirement for UHI reports for 100 largest cities €1.89 million €6.57 million Heat-related mortality and at the city level (by population) in Bulgaria. The UHI strategy should include (strategy (strategy morbidity; demand for emergency local mapping of UHI effects (similar to that of Sofia city) development only, development only, and health care services; UHI Measure type: to understand the most impacted and vulnerable areas, for not considering not considering index; air quality; cooling degree early adaptation activities prioritized actions. The UHI strategy should also include costed strategy strategy days (energy consumption); heat adaptation options and actions at the city, community, implementation implementation building overheating (comfort and individual levels, which can take different forms (hard costs) costs) level); building overheating and soft; physical implementations, policy reforms and new programs). This estimate considers strategy development only (not its implementation and assumes periodic upgrade and enhancement of the strategy on 10-year cycle. ANNEX 3. Details on Costings of cca Measures in Case Studies 155 TOTAL 5-YEAR TOTAL NPC FOR MEASURE SUMMARY OF ACTIVITIES AND COSTS KPIS RELEVANT TO THE MEASURE BUDGET OUTLOOKB 2023–2050C Improved access to cooled Replacement of urban public transport vehicles over a 5-year €836.1–924.1 €780.14–840.16 Productivity; transport public transport period to ensure the availability of air conditioning in million (average million (average overheating €880.1 million) €800.15 million) Measure type: Settlements above 1,000,000 citizens (Sofia): average €621.92 climate smart million; Settlements between 100,000 and 1,000,000 citizens (Plovdiv, Varna, Burgas, Ruse, Stara Zagora): average €121.31 million; and Settlements between 30,000 and 100,000 citizens (remaining 20 largest settlements): €56.92 million. Building standards for new Considers a requirement for 20 standards/guidelines in design, €1.6 million €5.58 million Heat-related mortality and development planning, and so on to be revised/developed over the period morbidity; demand for emergency considered. and health care services; UHI Measure type: index; air quality; cooling degree climate smart Assumes requirement for periodic upgrade and enhancement days (energy consumption); on 15-year cycle. building overheating (comfort level); building overheating Building improvements of Considers 10% of existing stock retrofitted per 5-year cycle €2.28–4.89 billion €10.1–21.6 billion Heat-related mortality and existing buildings over time horizon (that is, to 2050). By 2050, 60% of stock (average €3.59 (average €15.85 morbidity; demand for retrofitted. billion) billion) emergency and health care Measure type: services; UHI index; air quality; climate smart Assumed that current portfolio level is maintained. This may be productivity; cooling degree days adjusted to allow for changes in population and demographics (energy consumption); building over the period considered. overheating (comfort level); Costs presented considering (a) lower estimate of design for building overheating; green and heat resilience allowing for, for example, sealed mechanical blue spaces (proxy for ambient ventilation installed and maintained plus sealed glazing and (b) cooling and outdoor comfort) upper estimate for cost allowing for premium for, for example, advanced natural ventilation system and energy efficient cooling system, provision of heat resistant materials, external and internal shading, high performance glazing plus green, blue, and hybrid solutions. Marginal costs can be estimated from the ranges presented. ANNEX 3. Details on Costings of cca Measures in Case Studies 156 TOTAL 5-YEAR TOTAL NPC FOR MEASURE SUMMARY OF ACTIVITIES AND COSTS KPIS RELEVANT TO THE MEASURE BUDGET OUTLOOKB 2023–2050C Urban greening and blue Creating and preserving blue-green ‘arches’ and public spaces Not assessed UHI index; air quality; cooling degree days (energy solutions is a relatively simple and effective way to lower surface and specifically for consumption); building overheating; green and blue air temperatures. Specific measures include using urban Bulgaria spaces (proxy for ambient cooling and outdoor comfort) Measure type: greening solutions such as increasing the number of trees climate smart and other plants, particularly in strategic locations around buildings, streets, and parking lots (including by using cost- effective permeable green-gray parking surfaces) improving the integration of rivers and green spaces into the urban fabric constructing decorative as well as drinking water fountains implementing short-term measures during extreme heat events such as using water to cool streets and public spaces. Source: World Bank. Note: The costs are estimated in 2022 euros (€) for 2023–2040. a. Costs are estimated considering an RCP8.5 scenario for heatwave occurrence and other modeling. b. 5-year budget outlook considers undiscounted costs over the shorter-term 5-year planning horizon. c. Net present cost: the present value of costs for 2023–2050, considering a 3 percent discount rate. ANNEX 3. Details on Costings of cca Measures in Case Studies 157 Table 12. Overview of CCA measures costed addressing wildfire risks in selected sectors CCA MEASURE DESCRIPTION MAIN BENEFITS ADAPTATION MEASURES PORTFOLIO: WILDFIRE HAZARD, EMERGENCY PREPAREDNESS, AND RESPONSE Strengthen the potential of fire The measure would allow purchasing of new equipment for firefighting teams and personal Increased capacity and resources responders to cope with wildfires protection equipment. It will also address training of fast-response firefighting groups in the to effectively respond to wildfire forest enterprises as well as in the volunteer groups in villages. emergencies Measure type: low regret This measure will improve the efficiency in fighting forest fires and decrease losses and Decreased wildfire-related mortality chances for loss of human life and property. and losses of high-value resources and assets (HRVAs) Create a team for airborne This measure will allow faster response to wildfire emergencies, especially in remote areas and Increased capacity to effectively respond firefighting and purchase the steeper mountain terrain, where road network is not dense enough to allow fast response with to wildfire emergencies, including in necessary specialized aircraft specialized vehicles. steep terrains and remote areas and other equipment Reduced response time and improved Measure type: efficiency of firefighting low regret / early adaptation Reduced estimated share of arson/ activities intentional cases in wildfires Build national system for rapid The system, suggested in the National Climate Change Adaptation Strategy and Action Plan for Reduced time in identification of fire detection and response to the Republic of Bulgaria (2019), will allow to have a centralized observation and coordination fires and other hazards in forests and this and other natural calamities facility. It will ensure quick detection and decision support in case of occurrence of fires and surrounding areas and increased other natural disasters in forest territories. efficiency in response Measure type: low regret / early adaptation activities Education and public outreach The measure includes education campaigns, regular public messages, and activities during Improved knowledge of most vulnerable activities fire-prone seasons and awareness messages during days with high fire danger through stakeholders about wildfire risk and television, radio, highway information systems, and internet media. It also includes training impacts Measure type: activities for citizens and specialized personnel at municipalities, schools, forest enterprises, no regret Behavioral change linked to improved and other organizations related to fire risk. understanding of wildfire initiation and The aim of this measure is to increase knowledge in stakeholders, especially in farmers, about ignition causes the risk of wildfires and the high losses they cause. It also aims at improving the knowledge on Increased measures of stakeholders for how to respond in case of wildfires. preparedness and prevention of wildfire risk and impacts Reduced risk of human life loss ANNEX 3. Details on Costings of cca Measures in Case Studies 158 CCA MEASURE DESCRIPTION MAIN BENEFITS ADAPTATION MEASURES PORTFOLIO: WILDFIRE HAZARD, FORESTRY MEASURES Legal activities The measure aims to analyze and promote appropriate legal activities to increase responsibility Reduced risk of fire initiation and large and punishment for deliberate causing of fires. wildfires Measure type: early adaptation activities In addition various adaptation measures will require modifications in Ordinances and other legal acts. Fire mitigation and risk reduction The measure will aim to promote various activities in forest territories which reduce the chance Reduced risk of human life loss and actions in forest and agriculture of fire initiation, spread, and growth and hence reduce the risk of high losses. It is related damages in ecosystems lands to initial preparation and annual maintenance of various mineralized stripes and similar fire barriers in forests, building and regular maintenance of forest roads, measures for reduction Measure type: of fuel in high-risk zones such as removing of low vegetation, branches, controlled grazing, climate smart / early adaptation controlled burning. Building accessible small water dams helps fill water tanks for firefighting activities operations. The measure will also aim at creating and maintaining defensible spaces and special measures for reducing the risk of fires in WUIs. Improving the plans for This measure will allow to change the approach in planning mitigation and risk-reduction Improved planning for mitigation and protection of forest territories measures in forest territories. It will include modelling of wildfire risk at the national and local risk reduction measures levels and changing the rules and approaches for preparation of the plans for protection of Measure type: Improved investments in resources and forest territories. climate smart / low regret capacity to respond to wildfires ANNEX 3. Details on Costings of cca Measures in Case Studies 159 Table 13. Overview of costs of CCA measures addressing wildfire risks in selected sectors TOTAL 5-YEAR BUDGET MEASURE SUMMARY OF ACTIVITIES AND COSTS PRIORITIZATION AND COST-BENEFIT OUTLOOK (€, MILLIONS) ADAPTATION MEASURES PORTFOLIO: EMERGENCY MANAGEMENT Strengthen the potential of Renewal and upgrading of the equipment of the firefighting brigades at the firefighting 91 High priority and urgency to fire responders to cope with services: €71 million (5-year) increase the capacity for firefighting wildfires and decrease the risk of human life Equip and train fast-response firefighting groups in the forest enterprises: €10 million loss and high environmental capital Measure type: (5-year) losses low regret Equip and train volunteer groups in villages in forested regions: €10 million (5-year) Create team for airborne Build national system for airborne firefighting—purchase the necessary firefighting 170 High priority to increase the firefighting and purchase specialized aircraft, build ground-based operation sites, and create team capacity for firefighting in extreme the necessary specialized wildfires Annual maintenance costs for maintaining the system aircrafts and other equipment Measure type: low regret / early adaptation activities Build national system for Installation of equipment for autonomous detection of fires 8 High priority; necessary to detect rapid fire detection and quickly problems in forested Creational of national monitoring system response to this and other regions and organize fast and natural calamities coordinated response Measure type: low regret / early adaptation activities Education and public Multi-level information and education campaigns, regular public messages, and 5.5 High priority and cost-benefit ratio; outreach activities activities during fire-prone seasons and awareness messages in days with high fire crucially important to reduce the danger through television, radio stations, highway information systems, internet risk of wildfire initiation Measure type: media: €2 million (5-year) no regret Training activities for citizens specialized personnel at municipalities, schools, forest enterprises, and other organizations related to fire risk: €3.5 million (5-year) ANNEX 3. Details on Costings of cca Measures in Case Studies 160 TOTAL 5-YEAR BUDGET MEASURE SUMMARY OF ACTIVITIES AND COSTS PRIORITIZATION AND COST-BENEFIT OUTLOOK (€, MILLIONS) Legal activities for improved Analysis and initiatives to propose legal changes 0.3 High priority fire risk management and responsibility Measure type: early adaptation activities ADAPTATION MEASURES PORTFOLIO: FORESTRY Fire mitigation and risk Forest road maintenance and building new roads in areas with low road density: €25 38 High priority and cost-benefit ratio; reduction actions in forest million (5-year) on-site activities for reduction of and agriculture lands the risk for fire initiation and spread Initial preparation and annual maintenance of various mineralized stripes and similar Measure type: fire barriers in forests: €5 million (5-year) climate smart / early Measures for reduction of fuel in high-risk zones - removing of low vegetation, adaptation activities branches, controlled grazing, controlled burning: €5 million (5-year) Maintenance of fire-watch towers, equipment, costs for hiring fire watchers: €3 million (5-year) Improving the plans Modelling of wildfire risk at the national level 1 High priority and cost-benefit ratio; for protection of forest this is a crucial step necessary for Changing the rules and approaches for preparation of the plans for protection of territories managing and mitigating wildfire forest territories to comply with wildfire risk maps at the national and regional levels risk. Measure type: and initiatives to introduce the new system in action climate smart / low regret Periodic plans upgrade and enhancements Source: World Bank. ANNEX 3. Details on Costings of cca Measures in Case Studies 161 Romania Table 14 offers an overview of CCA measures in selected sectors in Romania, the view of the MEWF or Government of Romania. The measures proposed in based on the Draft National Strategy for CCA and corresponding Action Plan the draft NAP primarily took into account the allocations/financing available (referred to as ‘NAP’), as well as the measures/proposed alternatives for through European or international funding mechanisms, targeting both public achieving the Flood Risk Management Plans’ objectives, in accordance with funds and, where possible, private funds. The calculation of the amounts the World Bank Floods RAS.118 provided by the MEWF in the NAP was based on both an expert judgement and a summing of the values of the financing lines available (MEWF noting the list of Table 15 provides a more detailed overview. All the figures included in the table financing lines covered is not exhaustive). Based on this, a value that was are based on the draft version of the National Strategy for CCA and Action Plan considered to be accessible and achievable for the authorities and the dated August 2023.119 The categories/packages of measures presented were implementing stakeholders was proposed and included in the draft Action Plan. proposed by the World Bank team for the analysis and do not necessarily reflect Table 14. Overview of selected CCA measures in Romania addressing four hazards CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND FLOOD RAS OUTPUTS*) FOR SELECTED SECTORS HEAT AND MULTI-HAZARD RELATED MEASURES/PORTFOLIO (€4.3 BILLION)  Urban systems (NAP): • Improving the climate resilience of urban systems • Improving existing building codes and norms to increase resilience to the effects of extreme climate events • Adapting risk analysis and hedging plans and defense plans in case of specific climate change emergencies • Development/implementation of education, research, information, and awareness programs for the population 118 Draft Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030, version August 2023 published on MEWF website for public consultations; *Flood RAS/Output No. 7 - Report on advice provided to MEWF in the preparation of twelve (12) final draft Flood Risk Management Plans, under the RAS on Technical Support for the Preparation of the Flood Risk Management Plans for Romania (P170989); Output No. 7 - Report on advice provided to MEWF in the preparation of twelve (12) final draft Flood Risk Management Plans, under the RAS on Technical Support for the Preparation of Flood Risk Management Plans for Romania (P170989). 119 Romania’s draft National Strategy for Climate Change Adaptation and its Action Plan have been published for public consultation on the Ministry of Environment, Water and Forests’ website in August 2023, as part of the official approval process. At the time of completion of the present report, the draft Strategy and Action Plan are in the process of being approved, based on the revisions following the consultations. Therefore, the numbers analyzed and presented in this report rely on the draft Strategy and Action Plan version from August 2023, which may eventually differ from the final version to be approved by the Government of Romania. ANNEX 3. Details on Costings of cca Measures in Case Studies 162 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND FLOOD RAS OUTPUTS*) FOR SELECTED SECTORS Energy sector (NAP): • Increasing the resilience of the energy sector • Increasing the resilience of the heating and cooling sector • Developing education, information, and awareness programs to increase resilience in the field of energy • Establishing critical infrastructure in energy systems and implementing measures to deal with the impacts of extreme events Transport sector (NAP): • Consolidation of ground infrastructure (road, urban, rail) to improve resilience to climate change  • Consolidation of air transport infrastructure to improve resilience to climate change  • Consolidation of shipping infrastructure to improve resilience to climate change  • Transport sector vulnerability assessment to extreme weather events  • Integrating climate change considerations into planning and decision-making processes  DROUGHT HAZARD RELATED MEASURES/PORTFOLIO (€6.1 BILLION)  Agriculture sector (NAP): • Developing an adaptation strategy in agriculture • Achieving an efficient management of agricultural land • Improving the level of knowledge of soils and agriculture and the link with climate change • Raising awareness about risk management and access to risk management tools Water resources (reducing the risk of water scarcity) (NAP): • Updating the policy and regulatory framework based on (a) quantitative and qualitative assessments of water requirements by type of use, (b) identification of key areas potentially deficient in terms of water resources available, and (c) period assessment of the impact of climate change  • Promoting the legislative, policy, and institutional framework regarding NBS and natural water retention measures  • Strengthening the legal framework for protecting critical water supply sources by mapping the main areas potentially deficient in terms of water resources  • Examining and updating legal regulations by taking into account changing natural conditions  • Examining legal regulations and promotion of regulations to limit groundwater use  • Strengthening the regulatory framework for the sustainable management of water and wastewater sector and for acceleration of the population‘s access to quality services according to European directives  ANNEX 3. Details on Costings of cca Measures in Case Studies 163 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND FLOOD RAS OUTPUTS*) FOR SELECTED SECTORS • Protecting and conserving water resources in areas at risk of scarcity  • Adapting water resources management infrastructure and optimization of water use  • Restoring natural water accumulation areas - wetlands to optimize irrigation systems with surface and/or groundwater resource • Supporting investments in the water supply network to reduce losses in water distribution network systems • Assessing the quality and feasibility of continuing to use groundwater resources in conjunction with artificial and/or natural supply of groundwater reservoirs • Assessing the feasibility of coastal desalination for drinking treatment in water-deficient coastal basins • Reducing the effects of climate change on groundwater bodies and terrestrial and aquatic ecosystems dependent on them  • Taking measures, including legislative and policy measures, to increase climate resilience • Conducting studies and research to identify and promote NBS and natural water retention measures • Strengthening transboundary cooperation on water resources management  FLOOD HAZARD RELATED MEASURES/PORTFOLIO (€6.9 BILLION FOR 2022–2028) Flood risk reduction (NAP measures):  • Developing plans, actions, and measures for the reduction of flood risk in the areas where the flood risk is high (fluvial, rainwater, coastal sources) • Increasing the safety of dams and piers (NAP measures): • Increasing the safety of flood defense infrastructure  • Increasing the safety of transport infrastructure networks Package of high-priority flood protection measures: (Flood RAS) €6.9 billion for the period 2022 to 2028, covering initial investment, replacement, operation and maintenance, land purchase, mitigation costs and revenues. Integration of flood risk management into spatial and urban planning* (Floods RAS) - Measures not individually costed: • Development of methodology for integration • Revision/update of relevant legislation • Information campaigns for citizens to raise awareness on urban flooding Promoting NBS/Green Infrastructure solutions for flood risk management in urban areas* (Floods RAS) - Measures not individually costed: • Setup of national program office, including funding and inter-institutional working group • Identification of sites • Implementation of pilot projects • Monitoring and evaluation ANNEX 3. Details on Costings of cca Measures in Case Studies 164 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND FLOOD RAS OUTPUTS*) FOR SELECTED SECTORS Adapting infrastructure (transport, hydrotechnical works) to increasing flood risks due to climate change* (Floods RAS) - Measures not individually costed: • Review and adapt existing technical regulations and norms  • Update/improve inventory of infrastructure  • Prioritize assets at risk Erosion and torrent control program* (Floods RAS) - Measures not individually costed: • Legislative framework gap analysis • Setup of program office, including funding and inter-institutional working group • Selection of the priority locations for intervention • Design and implementation • Monitoring and evaluations National program for further strengthening capacities for flood risk management and the implementation of the Flood Directive, including* (Floods RAS) - Measures not individually costed: • Evaluation of FRMP second cycle • Strengthening data collection and management • Monitoring of FRMP implementation • Planning development of FRMP3 WILDFIRE HAZARD RELATED MEASURES/PORTFOLIO (€2.3 BILLION)  Adaptation of forests and the forest-based sector to the impacts of climate change:  • Updating the technical and legislative framework, based on scenario-based research • Encouraging the development/use of infrastructure (including forest access to increase intervention and response capacity, in case of wildfires), minimal or non-invasive forest technology and logistics • Promoting digital innovations in forestry, including through monitoring forest ecosystems  • Stimulating research and innovation to enhance the effectiveness of forest management and CCA  • Providing financial incentives to forest owners and managers to restore the quality and quantity of forest ecosystems  ANNEX 3. Details on Costings of cca Measures in Case Studies 165 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND FLOOD RAS OUTPUTS*) FOR SELECTED SECTORS Protection, restoration, and expansion of woodland:  • Extend forest and tree cover through afforestation and reforestation with highly biodiverse forests and stimulate afforestation  • Create and/or update afforestation programs for degraded land and legal/financial mechanisms  • Create and/or update programs to extend the forest curtain system and legal and financial mechanisms to extend the forest curtain system  Boosting forest bioeconomy within sustainable limits and supporting socioeconomic functions of forests:  • Promoting sustainable forest bioeconomy for sustainable, long-liferaw wood materials and products  • Ensuring the sustainable use of wood resources for bioenergy  • Promoting a forest bioeconomy based on the value of non-wood products Adapting forest regeneration/restoration practices to the needs imposed by climate change:  • Extension of forest and tree areas through afforestation and reforestation with forests rich in biodiversity and legal and financial mechanisms to stimulate the afforestation of land of low agricultural interest.  • Creation and/or updating of afforestation programs for degraded land and legal and financial mechanisms to enable the afforestation • Establishment of programs or mechanisms to regulate forest corridors along water courses and maintain them in favorable conservation status  • Creation and/or updating of programs for the extension of the forest curtain system and legal and financial mechanisms to allow to expand the system of forest curtains  • Enhancement of forest multifunctionality and the role of the forest as a carbon sink, including by protecting forests and restoring forest ecosystems  Minimizing the risk of climate change on forests and through forests:  • Developing knowledge on forest adaptation to climate change impacts by identifying and promoting solutions to control biotic and abiotic forest pests, forest decline, windfalls, and other natural disturbances of forest ecosystems  • Developing knowledge on the impact of climate change on forests and ways to prevent, act, and respond to specific natural disasters caused by extreme weather events: landslides, drought, wildfires, windfalls, floods, and so on  Source: Draft Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030, version August 2023 published on MEWF website for public consultations; *Flood RAS/Output No. 7 - Report on advice provided to MEWF in the preparation of twelve (12) final draft Flood Risk Management Plans, under the RAS on Technical Support for the Preparation of the Flood Risk Management Plans for Romania (P170989); *Flood RAS/Output No. 7 - Report on advice provided to MEWF in the preparation of twelve (12) final draft Flood Risk Management Plans, under the RAS on Technical Support for the Preparation of Flood Risk Management Plans for Romania (P170989). ANNEX 3. Details on Costings of cca Measures in Case Studies 166 Table 15. Summary of sectoral / programmatic adaptation analytics for Romania CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE HEAT AND MULTI-HAZARD RELATED MEASURES/PORTFOLIO (€4.3 BILLION)  Urban systems  • €793 million, out of which  • Green and white solutions to UHI (Austria)121 €441,110,890– 1.27–2.68 (NAP) 2,621,222,410 • €178 million for developing CCA • EU Tactical Level Guidance on Adapting Buildings action plans  to Climate Change122 • €360 million for improving building • Development and Appraisal of Long-Term codes and regulations  Adaptation Pathways for Managing Heat Risk in • €115 million for adapting the Risk London123 Analysis and Coverage Plans)120 and • Economics of Climate Change, Adaptation and defense plans  Decision Support in Europe124 • €140 million for developing/ • Climate Change: Costs of Impact and Lines of implementing education, research, Adaptation (France)125 information, and awareness programs • Sustainable urban drainage systems (EU MS) • €4.1 billion per year • 0.31 (0.1– 0.6) • Cooling of hospitals (EU MS)126 • €1.0–3.2 billion per • 0.5 (0.2–1.5) year 120 The Risk Analysis and Coverage Plan represents a document that includes the potential risks identified at the level of an administrative-territorial unit, the measures, actions, and resources necessary for the management of those risks. 121 Johnson, D. 2021. A Cost-Benefit Analysis of Implementing Urban Heat Island Adaptation Measures in Small and Medium-Sized Cities in Austria. International institute for Applied Systems Analysis (IIASA). Link. 122 Climate-ADAPT 2023d. 123 Kingsborough, Ashley, Katie Jenkins, and Jim W. Hall. 2017. “Development and Appraisal of Long-Term Adaptation Pathways for Managing Heat-Risk in London.” Link. 124 Paul Watkiss Associates. 2023. Economics of Climate Change, Adaptation and Decision Support in Europe. Link. 125 Climate-ADAPT. 2012. Methodologies for Climate Proofing Investments and Measures Under Cohesion and Regional Policy and the Common Agricultural Policy. Link. 126 Climate-ADAPT 2012. ANNEX 3. Details on Costings of cca Measures in Case Studies 167 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE • Public buildings retrofitting for energy efficiency • €40 million • total energy cost savings and sustainability (Albania)127 are €29 million per year or €500 million over the lifetime • Public buildings retrofitting for energy efficiency • €6,933,333 • 0.99-1.15 and sustainability - emergency center (Serbia) • Public buildings retrofitting for energy efficiency • €1,942,308 • 0.97-1.45 and sustainability - kindergarten (Serbia) • Public buildings retrofitting for energy efficiency • €432–500 per m2 • NPV is €8.8 million for and sustainability - hospital (Serbia) the most cost-effective option • UHI adaptation plan in Antwerp city (Belgium)128 • €70,000 • Green roofs against climate change (GRACC) • €912,263 Project (UK)129 • Establishment of Cool Centers (Bulgaria Case • 5-year budget outlook • NPC (2023 – 2050) Study from this report) - €1.11–1.64 billion €1.81 - 2.67 billion (average €1.38 billion) • Building standards for new development (Bulgaria • 5-year budget outlook - • NPC (2023–2050) Case Study from this report) €1.6 million €5.58 million • Urban heat island strategy at city level (Bulgaria • 5-year budget outlook - • NPC (2023–2050) Case Study from this report) €1.89 million €6.57 million • Eurocode suite revision (EU) • €200 million 127 Novikova, A., Z. Szalay, M. Horváth, et al. 2020. “Assessment of Energy-Saving Potential, Associated Costs and Co-Benefits of Public Buildings in Albania.” Link. 128 Climate-ADAPT. 2023h. Adapting to Heat Stress in Antwerp (Belgium) Based on Detailed Thermal Mapping. Link. 129 EC. 2021d. Green Roofs against Climate Change. Link. GRO. 2021. The Gro Green Roof Code. Link. ANNEX 3. Details on Costings of cca Measures in Case Studies 168 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE Energy sector €123 million, out of which  • Hydropower reservoir stations: increase in dam • €16 billion per year • N/A (NAP) • €76 million for increasing the height (6 EU MSs) resilience of the energy sector  • Adaptation of electricity grids (26 EU MSs, • €0.64–0.65 billion • 5.1 (0.2–10) • €5 million for increasing the excluding Malta) per year resilience of the Heating and Cooling sector  • Additional cooling of thermal power plants • €0.64 billion • N/A (EU MS) per year • €15 million for education, information, and awareness programs  • High efficiency ventilation in 2025 • €0.1–41.8 billion • 1.8 (0.2 -660) (EU MS)130 per year • €26.5 million for critical infrastructure in energy systems and • Renewable energy plant construction, energy • €102.19–98.95 million • Net Benefit: €72.31– measures for extreme events  efficiency improvement (Montenegro) per year 1,187.88 million per year Transport sector €1.9 billion, out of which  • Railway network electrification and climate • €519.04 million   (NAP) • €830 million for consolidation of resilience improvement (Latavia) ground infrastructure  • Patras - Pyrgos motorway (Greece) • €64–74.4 million • €475 million for consolidation of air • High Speed 2 rail network (UK) • €56 billion transport infrastructure  • Dubrovnik Airport (Croatia)131 • €225.3 million • €435 million for consolidation of shipping infrastructure • €12 million for transport sector vulnerability assessment  130 Climate-ADAPT 2012. 131 EC 2018. ANNEX 3. Details on Costings of cca Measures in Case Studies 169 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE • Resilient road assets (Albania)132 • €6.3–32.1 million • 0.1–1.1 • Adapting tracks to higher temperatures (EU MS) • €0.06–0.26 billion per • 2.0 (0.34–9) year • Adapting roads to higher temperatures (EU MS) • €2.9–8.9 billion per • 0.41 (0.2–0.9) year • Adapting roads to increase in precipitation • €0.03–0.14 billion • 0.45 (0.1–1.9) (EU MS) per year • €130 million for adapting of planning • Better surface asphalt for European runways • €0.14–0.43 billion • N/A and decision-making processes (EU MS) per year • Retrofitting existing infrastructure of airports’ • €0.04–0.18 billion • N/A drainage system (EU MS)133 per year • Improved access to cooled public transport • 5-year budget outlook • NPC (2023–2050) (Bulgaria Case Study from this report) €836.1 million – €780.14 million €840.16 €924.1 million (average million (average €800.15 €880.1 million) million) 132 Xiong and Alegre 2019. 133 Climate-ADAPT 2012. ANNEX 3. Details on Costings of cca Measures in Case Studies 170 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE DROUGHT HAZARD RELATED MEASURES/PORTFOLIO (€6.1 BILLION)  Agriculture sector €4.5 billion, out of which • Irrigation, drainage, and fertilizer improvement in • US$310–9,600 • Net Benefit US$400– (NAP) • €423 million for developing an the agriculture sector for climate resilience (North (2009 value) 74,000 (2009 value) agriculture adaptation strategy  Macedonia)134 • €4,036 million for achieving an • Additional farm advisory service (EU MS) • €0.053–0.198 billion • N/A efficient management of agricultural per year land  • Irrigation efficiency (EU MS) • €0.331 billion per year • N/A • €53 million for improving the level of knowledge  • On-farm harvesting and storage of water • €0.33–5.27 billion • 10.9 (2.8–136) (EU MS) per year • €2.5 million for awareness raising and risk management tools  • Plant winter cover (EU MS) • €0.95–1.21 billion • 1.0 (0.7–1.4) per year • Improvement animal rearing conditions • €0.76 billion • 1.3 (EU MS)135 per year • Modernization of existing on-farm irrigation • €400 million infrastructure (NSP for the EU CAP as per the CCDR) • Establishment of new, small irrigation systems • €85 million at the farm level (NSP for the EU CAP as per the CCDR): 134 Sutton, W., et al. 2013. Reducing the Vulnerability of the Former Yugoslav Republic of Macedonia’s Agricultural Systems to Climate Change. Link. 135 Climate-ADAPT 2012. ANNEX 3. Details on Costings of cca Measures in Case Studies 171 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE Water resources €1.6 billion, out of which  • Options for sustainable agricultural production • €68,440 (reducing the risk • €990.5 million for measures to and water use in Cyprus under global change of water scarcity): strengthen the legislative and (“AGWATER”) (Cyprus)136 (NAP) regulatory framework, as relevant/ applicable  • Water management in a new district in Rouen • €60 million (France)137 • €200 million for adaptation of existing water resources management • Data-modelling system and the decision support • €2.044 million infrastructure and optimization of tool for the integrated marine and inland water water use  management for use of institutions related to water management (Estonia)138 • €250 million for restoration of natural water accumulation areas - wetlands to optimize irrigation systems • €50 million for supporting invest­ ments in the water supply network • €55 million for the development • Integrated marine and inland water management • €6.9 million and implementation of a National (Estonia)139 Program for ecological restoration of • Establishment of systems for information rivers  exchange on climate change adaptation • €15 million to conduct studies and • Implementation of strategies and measures for research to identify and promote NBS adapting to a changing climate and natural water retention measures  • Others • Measures to reduce the climate change related • €1.05 billion impacts of impoundments in key water bodies (Updated National Basin Management Plan cited in the CCDR) 136 EC 2018. 137 EC 2018. 138 EC 2018. 139 EC 2018. ANNEX 3. Details on Costings of cca Measures in Case Studies 172 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE FLOOD HAZARD RELATED MEASURES/PORTFOLIO Flood risk €3.32 billion  Measures proposed in achieving the Flood Risk €6,89 billion reduction (NAP) • Developing plans, actions, and Management Plans’ objectives Floods RAS):  (Includes the measures for the reduction of flood • Avoid/control risks associated to floods  implementation of all risk in the areas where the flood risk proposed alternatives • Reduce the negative impact of floods on is high (fluvial, rainwater, coastal with the priority classes population  sources) very high, high, and • Reduce the negative impact of floods on moderate, covering • Strengthening knowledge on the infrastructure and economic activity the initial investment, impact of climate change on water replacement, resources, on the use of nature-based • Reduce the negative impact of floods on cultural operating,(maintenance, solutions, on how to prevent, act and heritage  land purchase, mitigation respond to specific natural disasters • Reduce the negative impact of floods on costs and revenues). caused by extreme weather events environment and achieve/maintain the environmental objectives in accordance with Water Framework Directive (WFD)  Increasing the €500 million  • Enhance the level of awareness and resilience These values are based safety of dams • Increasing the safety of dams and concerning flood risks, as well as increase the on the implementation of and piers (NAP)s piers - as appropriate, by prioritizing capacity for early warning, alarm and intervention, the measures prioritized the implementation of NBS, and response in case of emergency at the local level. This natural water retention measures, entails a need for • Enhance the level of adaptation to climate change rehabilitation of existing defense direct investment of impacts lines, rehabilitation of existing dams approximately €3.45 that require emergency interventions billion. for safe operation ANNEX 3. Details on Costings of cca Measures in Case Studies 173 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE • Maximize efficiency in achieving flood risk €2.4 billion total costs objectives, considering the costs and available for the implementation funding  of flood protection measures for the • Improve the involvement of all stakeholders  2023–2027 planning cycle: approx. (within FRMP cycle 2, excluding operation-maintenance cost).  Preparedness package (Floods RAS)  €400 million • Consists of 29 measures (preparedness package) Integration • Development of methodology for • North West Bicester Eco Development (UK) • £20 million of flood risk integration • Flood adaptation urban planning in Central • €11,683,058 management into • Revision/update of relevant legislation Denmark Region (Denmark)140 spatial and urban planning • Information campaigns for citizens to (Flood RAS) raise awareness on urban flooding Measures not costed 140 EC 2018. ANNEX 3. Details on Costings of cca Measures in Case Studies 174 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE Promoting • Setup of national program office, • Green and grey infrastructure (Poland)141 • €217 million • 2 Nature-Based including funding and inter- Solutions/Green institutional working group • Enhance floodplain management (EU MS)142 • €73.9–79.3 billion per • 1.4 (1.1–1.7) Infrastructure year • Identification of sites solutions for flood • Chimney Meadows National Nature Reserve (UK) • €3,030–3,080 • 1.5–4.8 risk management • Implementation of pilot projects in urban areas • Padgate Brook River Restoration (UK) • £0.25 million • 18 • Monitoring and evaluation (Flood RAS) • Sigma plan for flood protection (Belgium) • €132 million • 1.87–5.52 Measures not costed • woody barriers and land management in • €4.5 million • 1.5–5.6 Yorkshire (UK) • Mayes Brook River Restoration project (UK)143 • £3.8 million • 7 • The Connecting Nature project - promoting • €12 million nature-based solutions for adaptation in urban areas (Ireland)144 Adapting Review and adaption of existing Measures to reduce vulnerability of the transport • £0.25 million • NPV €1.34–5.38 billion infrastructure technical regulations and norms sector flood risk (current and future projected)  (transport, • Update/improve inventory of hydrotechnical infrastructure works) to • Prioritize assets at risk increasing flood risks due to Measures not costed climate change (Flood RAS)  141 EEA 2023a. 142 Climate-ADAPT 2012. 143 World Bank and European Commission. 2021. Economics of Prevention and Preparedness: Investment in Disaster Risk Management in Europe Makes Economic Sense - Background Report. Washington, DC: World Bank. Link. 144 EC 2018. ANNEX 3. Details on Costings of cca Measures in Case Studies 175 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE Erosion and • Legislative framework gap analysis • Watershed management (Nepal)145 • €132 million • 1.15–4.38 torrent control • Setup of program office, including • Drainage trench for landslide and erosion • €17,652 (+ €400 per • NPV €17,277.75 program funding and inter-institutional management (Italy)146 year maintenance cost) (Flood RAS) working group • Selection of the priority locations for intervention • Design and implementation • Monitoring and evaluations Measures not costed WILDFIRE HAZARD RELATED MEASURES/PORTFOLIO (€2.3 BILLION)  Adaptation of €425 million • Financial contributions of planning applications • £21.7 million   forests and the • Update the technical and legislative for heathland fire prevention (UK)147 forest-based framework, based on continuous, • Integrated forest adaptation and fire management • €16.3 million sector to the scenario-based research on the plan (the Alpine region)148 impacts of climate impact of climate change on forests change  • Digital forest sensing and monitoring system • €1.4–21.6 • Strongly encourage the development/ (UN)149 (US$2–30) per km² use of infrastructure (including forest access to increase intervention • Waste removal (EU LIFE project)150 • €1–11.76 per ton, and response capacity, in case of mean cost €3.87 per wildfires) ton 145 World Bank. 2019c. Valuing Green Infrastructure Case Study of Kali Gandaki Watershed, Nepal. Link. 146 Salbego, G., M. Floris, E. Busnardo, M. Toaldo, and R. Genevois. 2015. “Detailed and Large-Scale Cost/Benefit Analyses of Landslide Prevention vs. Post-Event Actions.” Nat. Hazards Earth Syst. Sci. 15: 2461–2472. Link. 147 EEA. 2018. Climate-ADAP - 10 Case Studies: How Europe Is Adapting to Climate Change. Link. 148 Müller, Vilà-Vilardell, and Vacik 2020. 149 UNFCCC. 2009c. Cost of Implementing Methodologies and Monitoring Systems Relating to Estimates of Emissions from Deforestation and Forest Degradation, the Assessment of Carbon Stocks and Greenhouse Gas Emissions from Changes in Forest Cover, and the Enhancement of Forest Carbon Stocks - Technical Paper. FCCC/TP/2009/1. Link. 150 JRC. 2015. Costs of Restoration Measures in the EU Based on an Assessment of LIFE Projects. Link. ANNEX 3. Details on Costings of cca Measures in Case Studies 176 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE • Promote digital innovations in • Building forest fire resilience using recycled water • €5.49 forestry, including by creating and/ (Spain)151 or promoting current programs and mechanisms on monitoring forest Wildfire national strategy (Greece)152 • €1.76 billion ecosystems, traceability of timber • Pillar One: Upgrade of Infrastructure, Facilities, and control of illegal logging and Provision of Educational Programs • Stimulate research and innovation • Pillar Two: Early Warning Systems and Means of to enhance the effectiveness Prevention of enhanced sustainable forest • Pillar Three: Equipment and Means of Support management and adaptation of the and Coordination forest-based sector • Pillar Four: Aerial Firefighting Equipment and • Provide financial incentives to forest Ground Infrastructure owners and managers to restore the quality and quantity of forest • Fire mitigation and risk reduction actions in forest • €38 million for 5-year ecosystem and agriculture lands (Bulgaria case study from budget outlook this report) • Improving the plans for protection of forest • €1 million for 5-year territories (Bulgaria case study from this report) budget outlook Protection, €1.06 billion • Peatland restoration (UK)153 • €172–8,037 (£150– • BCR 3–12, with a typical restoration, and • Extension of forest and tree 7,000) per ha value of 4 expansion of cover through afforestation and woodland  reforestation with highly biodiverse • Vegetation replanting (EU LIFE project)154 • €1,006–9,009 per ha, forests and use of legal and mean cost €4,857 financial mechanisms to stimulate per ha afforestation 151 Climate-ADAPT. 2022b. Building Fire Resilience Using Recycled Water in Riba-Roja de Túria, Spain. Link. 152 International Trade Administration. 2022. Greece Wildfire National Strategy. Link. 153 Watkiss, P., et al. 2019. The Impacts of Climate Change on Meeting Government Outcomes in England. Support Research for the 2019 Progress Report. Link. 154 JRC 2015. ANNEX 3. Details on Costings of cca Measures in Case Studies 177 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE • Creation and/or updating of • New woodland creation based on carbon • €32–121 million • BCR 4.3–12.3 afforestation programs for degraded sequestration (Sweden)155 (mixed tree species); land and legal and financial €51–217 million mechanisms for afforestation of (spacing between trees degraded land to increase resilience against wildfire risk) • Creation and/or updating of programs to extend the forest curtain system and legal and financial mechanisms to extend the forest curtain system Stimulating forest €134 million  • WUI management to residential houses • €46.75 million • BCR 3.1 bioeconomy • Promoting sustainable forest (Portugal)156 within sustainable bioeconomy for sustainable, long-life limits and raw wood materials and products • WUI management to industries (Portugal)157 • €44.48 million • BCR 2.1 supporting • Fuel management in forests for fire risk reduction • €2.21 million • BCR 11.9 • Ensuring the application of socio-economic (Portugal)158 sustainability criteria in the functions of production of biomass from forestry forests  for energy use, contributing sustainably to tackling energy poverty in local communities • Promoting a forest bioeconomy based on valorization of non-wood products 155 Phase 2 Sweden analytics. 156 World Bank and European Commission 2021, case study 18. 157 World Bank and European Commission 2021, case study 19. 158 World Bank and European Commission 2021, case study 20. ANNEX 3. Details on Costings of cca Measures in Case Studies 178 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE Adapting forest €377 million • Smart bark beetle monitoring and management • €0.25–5.68 million • BCR 21.7–24.2 regeneration • Creating programs or mechanisms to (background literature review) / restoration ensure maintenance in the forest only practices to the of native species specific to the non- • Invasive species and biodiversity management • €500–6,356 per ha, needs imposed by moral and pedo-stationary floor (EU LIFE project)159 mean cost €3,769 per climate change  ha • Establishing programs or mechanisms to regulate forest corridors along water courses and maintain them in favorable conservation status • Enhancing the multifunctionality of the forest and the role of the forest as a carbon sink, including by protecting forests and restoring forest ecosystems 159 JRC 2015. ANNEX 3. Details on Costings of cca Measures in Case Studies 179 CCA MEASURES PORTFOLIO (FROM DRAFT AUGUST 2023 NAP AND DRAFT FLOOD RAS POTENTIAL COST- OUTPUTS*) FOR EFFECTIVENESS RATIOS/ SELECTED ESTIMATED COSTS IN DRAFT EXAMPLE CCA MEASURES TO BUILD ON CCA PLAN POTENTIAL COSTS FROM BCRS FROM THE SECTORS ROMANIA NAP PRIORITIES FROM THE LITERATURE THE LITERATURE LITERATURE Minimizing the €247 million  • CCA Decision Support Tool (Austria)160 €188,000 • BCR 5.8, NPV of around risk of climate • Developing knowledge on forest €0.99 million change on forests adaptation to climate change and through impacts by identifying and promoting • Information tool for fire risk forecasting and €0.7 million • BCR 1.6 forests  solutions to control biotic and abiotic emergency fire response (Spain-Portugal)161 forest pests, forest decline, windfalls, • Integrated Forest Fire Analysis System (IFFAS) €2.34 million and other natural disturbances of (EU)162 forest ecosystems • Developing knowledge on the impact of climate change on forests and ways to prevent, act, and respond to specific natural disasters caused by extreme weather events: landslides, drought, wildfires, windfalls, floods, and so on Source: Draft Action Plan for the implementation of the National Strategy on Adaptation to Climate Change for the period 2023-2030, version August 2023 published on MEWF website for public consultations; *Flood RAS/Output No. 7 - Report on advice provided to MEWF in the preparation of twelve (12) final draft Flood Risk Management Plans, under the RAS on Technical Support for the Preparation of the Flood Risk Management Plans for Romania (P170989); *Flood RAS/Output No. 7 - Report on advice provided to MEWF in the preparation of twelve (12) final draft Flood Risk Management Plans, under the RAS on Technical Support for the Preparation of Flood Risk Management Plans for Romania (P170989). 160 World Bank and European Commission 2021, case study 21. 161 World Bank and European Commission 2021, case study 24. 162 Climate-ADAPT. 2016c. CALCHAS - An Integrated Analysis System for the Effective Fire Conservancy of Forests. Link. ANNEX 3. Details on Costings of cca Measures in Case Studies 180 BOX 16. MACROECONOMIC MODELS COMMONLY USED AND HOW THEY CONSIDER CLIMATE ADAPTATION Macro-structural models differ from CGE models from a technical and adaptation adjustments. Macro-structural models tend to generally be used more frequently by objective perspective.163 Both CGE and macro-structural models have been used for Ministries of Finance for fiscal and financial planning and considering shorter time dedicated analysis of climate and disaster shocks but are also often set up first to analyze frames (2030s–2050s), while CGE models are often used when longer timeframes are macroeconomic outcomes of CCM policies and then CCA. CGE models capture cross- considered (2050s–2100s). sectoral links and price effects and can consider greater sectoral details. In CGE models, The macroeconomic analysis in this case study was undertaken using a macro-structural adaptation is considered in an aggregated manner based on sector impact and high- model, which was selected for this case study following an extensive literature and level adaptation costs and benefits, when available. Macro-structural models have good methodology review. The model was adapted from the Solow-Swan economic growth dynamic properties and a well-defined equilibrium and are well suited for considering model to evaluate how damages and losses caused by disasters impact main macro- probabilistic shocks, an advantage for DRM analytics. The main difference between CGE fiscal indicators such as GDP and government expenditures. It provides reference and macro-structural models is the level of detail of sectors and the way damages and information for decision-making to implement policy measures that strengthen the adaptation measures enter the models. CGE models typically feature a high level of resilience of public finances against selected hazards. In the case of Romania, the sectoral detail, representing the economy with numerous sectors and inter-industry ‘Dobrescu macro-model’ was set up specifically for the MoF and used for analytics to flows based on input-output tables. This allows for a nuanced understanding of how inform the fiscal and budgetary strategy. The Dobrescu macro-model is similar to the economic policies or external shocks affect different parts of the economy. Macro- World Bank’s multisector macro-fiscal model with its climate extension (CC-MFMod),164 structural models may have a more aggregated view, focusing on larger sectors or the which has been used for World Bank CCDRs’ analytics in several countries worldwide. economy as a whole without the same level of inter-sectoral interaction. In CGE models, The macroeconomic analysis considers various inputs, including macroeconomic and damages from external shocks or policy changes are directly incorporated into the fiscal indicators, hazard impacts and adaptation measures to be taken by the government, production functions or consumer utility functions, affecting the equilibrium conditions and simulations for climate change-related hazards. Outputs on hazards considered in of the model. Adaptation measures can be modeled as changes in technology or this case study are taken from probabilistic disaster risk models (floods),165 econometric preferences, which in turn influence the model’s outcomes. Macro-structural models estimates (extreme heat),166 and machine-learning models (droughts, wildfires)167 might introduce damages and adaptations in a more aggregated form, such as changes combined with climate model projections and spatial analyses. in overall productivity or growth rates, without specifying the underlying sectoral 163 World Bank. 2021. Climate Modeling for Macroeconomic Policy: A Case Study for Pakistan. Policy Research Working Paper 9780. Link. 164 In the CC-MFMod, the standard Cobb-Douglas specification for potential GDP was modified along five dimensions to accommodate the climate focus of the model: (a) energy was included as a factor of production (see Hassler, Krussel and Olovsson 2012) and (b) the production function was modified to account for damages from climate change, including (i) reductions in aggregate total factor productivity (TFP) due to lower agricultural productivity, (ii) reduction in labor productivity and supply due to higher temperatures, (iii) the impact of pollution on the labor force, and (iv) the impact of flooding on capital stock. Burns, A., et al. 2019. The World Bank Macro-Fiscal Model Technical Description. Link. 165 Underlying data on flood impacts that informed WB and EC 2021b. 166 COACCH 2022; COACCH 2021a. 167 Need reference for CIMA analytics + IIASA analytics. Rossi, Lauro, Wens Marthe, De Moel Hans, et al. 2023. European Drought Risk Atlas. Link. ANNEX 3. Details on Costings of cca Measures in Case Studies 181 In terms of macroeconomic analysis of natural hazards in Romania, outcomes used certain RCP and SSP combinations170 to fully characterize the space for from previous studies analyzed the impacts, but not adaptation aspects low, medium, and high impact cases in terms of a range of projected climate specifically for that country. impacts.171 The result of the macroeconomic, spatially resolved impact assessment shows the changes in GDP and the economic loss under various Under the COACCH project,168 assessments have been undertaken to assess climate scenarios.172 For instance, under the medium impact scenario, there is the macroeconomic and sectoral impacts of climate change to inform a negative effect of climate change on GDP throughout Europe, with the greatest adaptation policies. The assessment considers a variety of models, reduction in GDP found in Western and Central Europe (see Figure 25). Though methodological approaches, climate scenarios, and data analytics to provide a Romania is not among the countries that face the biggest decrease in GDP, its downscaled assessment of the risks and costs of climate change in Europe. overall economy is still greatly affected. Meanwhile, results from sectoral Quantified by various physical and biophysical impact models, the sectoral analysis suggest the effect of climate change will have the most severe impact impact of various natural and climate hazards was assessed, which includes on sectoral economy in the long run (2070) under the SSP5 RCP8.5 scenario. analysis of energy demand and supply, labour productivity, agriculture, forestry, The forestry sector will be the most affected in Romania, while the agriculture fisheries, transport, sea level rise, and riverine floods. The results from sectoral and transportation sector is expected to experience GDP loss as well (see analysis were then introduced to the ICES macroeconomic CGE model, which Figure 26). The assessment also reveals a compounding effect of climate enables the analysis of the higher-level economic implications of climate change on regional GDP. change.169 As for the future climate and socioeconomic scenarios, COACCH 168 COACCH 2022. 169 COACCH. 2018. The Economic Cost of Climate Change in Europe Policy Summary Europe. Link. 170 The RCP-SSP combinations considered by the COACCH assessment: RCP2.6-SSP1, RCP2.6-SSP2, RCP2.6-SSP3, RCP4.5-SSP1, RCP4.5-SSP2, RCP4.5-SSP3, RCP4.5-SSP5, RCP6.0-SSP2, and RCP8.5-SSP5. 171 COACCH. 2019. “The Economic Cost of Climate Change in Europe: Synthesis Report on Interim Results.” Policy Brief by the COACCH Project. Link. 172 Bosello et al. 2020. ANNEX 3. Details on Costings of cca Measures in Case Studies 182 Figure 25. Changes in GDP in 2050 comparing the baseline and the medium impact scenario (2007 US$, millions) Nuts 2 borders GDP 2050 (Impact - Baseline) -16,32413 – -0,34294 -0,34294 – -0,14171 -0,14171 – -0,06322 -0,06322 – -0,02354 -0,02354 – -0,00696 -0,00696 – -0,00096 -0,00096 – 0 0 – 0 0 – 0 0 – 0 ANNEX 3. Details on Costings of cca Measures in Case Studies 183 Figure 26. Changes in GDP on agriculture and forestry in 2030, 2050 and 2070 comparing the baseline and the medium impact scenario (%) Source: COACCH 2020. Under a previous study,173 impacts of floods and earthquakes were also loss due to flood damage of private and public buildings is estimated at €585 assessed on GDP. The findings of the catastrophe risk modelling show that million (0.28 percent of GDP), similarly to the 0.23 percent of GDP estimated by Romania is one of the EU countries with the highest earthquake (seismic) risk JRC.174 Also, flood risk modelling predicts that 50-year return period flood could and flood (fluvial and surface water). AAL relative to the total building stock affect the equivalent of US$2 billion of the GDP in 2015, but by 2080, considering value exceeds 0.1 percent in each of the top-10 ranked countries for flood but change in socioeconomic and climate conditions, this figure may double or exceeds this threshold in only four countries for earthquake. The annual average even quadruple (depending on the mitigation pathway selected). 173 WB and EC 2021b. 174 World Bank. 2021c. Report on the Review of the Legal, Regulatory, and Institutional Framework Governing DRR in Romania. p. 275. ANNEX 3. Details on Costings of cca Measures in Case Studies 184 Table 16. Considerations and inputs on impacts and adaptation for macro models IMPACTS FOR CURRENT AND FUTURE CLIMATE IMPACTS CONSIDERING ADAPTATION/COSTS OF ADAPTATION FLOOD HAZARD/IMPACTS FROM CLIMATE CHANGE ON INFRASTRUCTURE Macro-structural models: Macro-structural models: Asset damages (AALs and expected probability curves*; baseline and future climate, Investment needs and BCRs/benefits to make infrastructure resilient/reduce potential ideally for various combinations of RCPs and SSPs, multiple time horizons and return asset damages* periods) Example Romania case study: Example Romania case study: • No results from EU phase 1. • Based on results from EU phase 174 • The costs of flood protection measures vary substantially depending on (a) • The AAL for floods (not including emergency response costs) may vary from socioeconomic growth scenarios; (b) climate change scenarios; (c) local US$4.39 million in case of 5-year return period event, under the scenario SSP1 constructions costs (for example, depending on soil type); and (d) risk tolerance, RCP1.9, up to US$660 million for a 100-year return period event, under SSP1 that is, the safety standard of measures (for example, 500-year return period RCP1.9 scenario standard). • Baseline US$500 million (2020 value) • Cost of high priority flood protection measures, according to World Bank Flood RAS, is about €6.9 billion for 2022–2028, covering initial investment, replacement, • Future based on 1,000 runs of SSP1 RCP1.9; SSP1 RCP2.6; SSP2 RCP4.5; SSP3 operation and maintenance, land purchase, mitigation costs, and revenues. This is RC P7.0; SSP5 RCP8.5 for 2050 and for 5-, 10-, 20-, 50-, 75-, 100-, 200-, 500-, consistent with World Bank adaptation pathways analysis,75 estimating costs in the and 1,000-year return period events range of about US$1 billion to US$5.6 billion per year. * Note: Generally average damage values are considered in terms of impacts on macroeconomic variables. The only example so far that truly considers extreme • Benefits of flood protection measures would accrue over the long term (while events is for Jamaica hurricane for the United States. investments require substantial up-front capital expenditure for long-life structures such as dikes). * Note: As transport networks were not considered under EU phase 1 and other CCDR studies, these investment needs/benefits cannot be considered (would require integration of findings but difficult due to different methodologies). 74 Underlying data on flood impacts that informed WB and EC 2021b. 75 Rozenberg and Fay 2019. ANNEX 3. Details on Costings of cca Measures in Case Studies 185 IMPACTS FOR CURRENT AND FUTURE CLIMATE IMPACTS CONSIDERING ADAPTATION/COSTS OF ADAPTATION CGE models: CGE models: Example Austria case study:76 Example Austria case study:77 • Hazards covered: flood • Sector: transport, catastrophe management • Time horizon: 2015 (current)/2030/2050 • Hazard covered: floods, landslides, and mudflows -based CATastrophe • Economic flood risk modelling: IIASA’s probabilistic risk­ • Impact chain and (bio)physical impact model: for transport, road damages due to SIMulation (CATSIM) framework increase in floods, landslides, and mudflows are considered, based on regression analysis on past damage events and costs; for catastrophe management, building • Result - current flood loss: expected direct losses of €258 million 2015 damages due to riverine floods are considered, based on simulation of flood • Result - future flood loss: expected annual losses of €354 million for 2030 and €511 damages in a hybrid convolution approach million for 2050 • CCA cost estimate: public adaptation expenditure in the base year (2008) for catastrophe management (mainly structural flood protection) is around €197 million. Meanwhile, for the adaptation pathway until 2050, the annual total CCA cost for the water sector is estimated to be €93 million, with a shift to more expenditure to labor and capital and less for construction. • BCRs: for flood protection measures, soft measures yield a BCR of 11, green measures yield a BCR of 2, and grey measures yield a BCR of 4. DROUGHT HAZARD/IMPACTS FROM CLIMATE CHANGE ON AGRICULTURE Macro-structural models: Macro-structural models: Agriculture productivity losses (likelihood of maximum losses); baseline and future Investment needs and BCRs/benefits to make agriculture and water sector resilient/ climate, ideally for various combinations of RCPs and SSPs, multiple time horizons reduce potential yield losses and return periods) Example Romania case study: Example Romania case study: • Based on insights from World Bank/IIASA report and external studies. • Based on new results from EDORA project/World Bank78 • Impacts on agriculture can occur through various channels (for example, heat • Crop yield losses (maize, wheat, and so on) affecting agricultural labor productivity, drought impacts on crop yields, agricultural supply chain disruptions due to flood impacts on roads)—thus making it difficult to capture them comprehensively. 76 PACINAS. 2017a. Flood Risk Case Study: Iterative Climate Risk Management. Link. 77 Bachner, et al. 2018. Public Adaptation to Climate Change: The Economy-Wide Costs and Benefits and Implications for Government Budgets. Link. 78 IIASA 2023; consistent with EDORA (European Drought Risk Assessment) methodology. ANNEX 3. Details on Costings of cca Measures in Case Studies 186 IMPACTS FOR CURRENT AND FUTURE CLIMATE IMPACTS CONSIDERING ADAPTATION/COSTS OF ADAPTATION • Baseline 2020: value of agricultural production US$13,851.80 million • Climate related losses: yield losses due to climate change are estimated to be €200 (2015 value) million for maize alone (equivalent to 3% of Romania’s agricultural GDP).79 In 2022, Romania experienced a drought that is estimated to have wiped out €1 billion. • Future based on CMIP6 runs for RCP/SSP combinations: SSP1 RCP2.6, SSP3 RCP4.5, SSP5 RCP8.5 with all years provided • Climate change adaptation investments have not been costed individually but include measures such as adoption of drought resilient crops, irrigation infrastructure, heat • Results: Reduction in value of agricultural production as % of GDP from 1.079% to adaptation for outdoor workers, and flood protection for agro-industrial facilities and 1.152% (around €2.5 billion) supply chain networks (that is, partly overlap with measures under heat and floods above). CGE models: CGE models: Example Germany case study:80 Example: Germany case study:81 • Hazards covered: droughts and extreme heat • Climate scenarios: weak/medium/severe climate impact • Sectors: agriculture • Time horizon: 2050 • Time horizon: 2018–2019 (current)/2050 (future) • CCA measures considered: investments in ‘hard’ new equipment and techniques that help farmers cope with climate impacts, such as digitization, enhanced crop • Climate scenarios: weak/medium/severe climate impact production systems, advanced agricultural technology and technical systems, and • Result - current: a total damage value of between €7 and just over €8 billion in the improved irrigation systems (‘soft’ measures such as crop rotation and cultivation agricultural sector due to droughts and extreme heat during 2018 and 2019 area management are found to have no significant impact on expenses and income and thus not included in the model) • Result - future: cumulative costs in agriculture between 2022 and 2050 are estimated to be €110, €120 and €160 billion for the weak, medium, and severe • CCA cost estimate: a 6% increase in capital expenditures in 2050 compared to the climate scenario baseline as a result of CCA investment • Macroeconomic benefit of CCA: investing in new equipment and other assets that help farms cope with climate impacts will reduce the negative impact on GDP, bringing it back to almost zero-climate GDP over 2022–2050 79 Prăvălie, R., I. Sîrodoev, C. Patriche, B. Roșca, A. Piticar, G. Bandoc, L. Sfîcă, et al. 2020. “The Impact of climate Change on Agricultural Productivity in Romania. A Country-Scale Assessment Based on the Relationship between Climatic Water Balance and Maize Yields in Recent Decades.” Agricultural Systems 179 (102767). 80 The Institute of Economic Structures Research (GWS). 2022. Schäden der Dürre- und Hitzeextreme 2018 und 2019: Eine ex-post-Analyse. Link.; Flaute, M., S. Reuschel, and B. Stöver. 2022. Volkswirtschaftliche Folgekosten durch Klimawandel: Szenarioanalyse bis 2050. Studie im Rahmen des Projektes Kosten durch Klimawandelfolgen in Deutschland. GWS Research Report 2022/02, Osnabrück. Link. 81 Flaute, Reuschel, and Stöver 2022. ANNEX 3. Details on Costings of cca Measures in Case Studies 187 IMPACTS FOR CURRENT AND FUTURE CLIMATE IMPACTS CONSIDERING ADAPTATION/COSTS OF ADAPTATION HEAT HAZARD/IMPACTS FROM CLIMATE CHANGE ON PRODUCTIVITY Macro-structural models: Macro-structural models: Impacts on labor productivity (productivity losses3, baseline and future climate, Investment needs and BCRs/benefits to enhance resilience of the workforce/reduce ideally for various combinations of RCPs and SSPs, multiple time horizons and return potential labor productivity losses periods) Example Romania case study: Example Romania case study: • Based on results from COACCH project/World Bank 82 • Based on results from the COACCH project and external literature • Economic cost of extreme heat in the absence of adaptation measures: Under • Local heat adaptation interventions are relatively simple and cost-effective current climate conditions, extreme heat costs 0.2% of GDP per year, estimated to solutions, such as shifting working hours to avoid the hottest periods during the day, rise to 0.8% by 2050 in an RCP2.6 scenario (1.2% for RCP4.5; 1.5 % for RCP8.5). installation of shading, ventilation, and air circulation systems Driven by labor productivity losses. • Heat-specific CCA costs are estimated to be around €78 million per year, covering • Baseline 28507.8 Output per worker (GDP constant 2015 US$)—International Romania’s agriculture and industry sectors Labour Organization (ILO) modelled estimates for 2022 • Benefits of these adaptation measures: considering an RCP2.6 scenario, the • Future based on CMIP6 runs for RCP/SSP combinations: SSP1 RCP2.6, SSP3 economic cost of extreme heat could be reduced from 0.8% of GDP (without RCP4.5, SSP5 RCP8.5 with all years provided adaptation) to 0.26% (with adaptation) through reduced impacts on labor productivity (from 1.2% to 0.36% for RCP4.5). • *Note: The projected GDP impacts under each scenario are as follows: • SSP1 RCP2.6 (sustainable development and low greenhouse gas emissions): A gradual GDP reduction was projected, starting at −0.1% in 2020 and reaching −0.8% by 2050. • SSP2 RCP4.5 (middle-of-the-road development and emissions): A more pronounced GDP decline was expected, with −0.2% in 2020, deepening to −1.2% by 2050. • SSP5 RCP8.5 (rapid development and high emissions): The most significant GDP decrease was forecast under this scenario, with −0.2% in 2020 and −1.5% by 2050. *Note: Generally, productivity losses are determined for outdoor workers, as for indoor workers it would depend on factors influencing indoor temperature. 82 COACCH 2022; COACCH 2021a. ANNEX 3. Details on Costings of cca Measures in Case Studies 188 IMPACTS FOR CURRENT AND FUTURE CLIMATE IMPACTS CONSIDERING ADAPTATION/COSTS OF ADAPTATION CGE models: CGE models: Example Austria case study:83 Example: Germany case study:84 • Hazard: rising temperature and extreme heatwaves • Assessment of the macroeconomic cost due to heat-related productivity loss over a two-year period (2008–2009) in Germany based on heat-related data recorded and • Sectors: manufacturing and trade sector external literature • Climate scenarios: three climate scenarios (mild, moderate, strong) and three • Result: economic cost between €8.5 billion and €10.3 billion, with a median value socioeconomic scenarios (low, medium, high sensitivity) of around €9.2 billion; heat-related deaths not monetized due to moral and ethical • Time horizon: 2016–2045 issues as well as deep uncertainties in the methodological approach • Impacts: For the manufacturing and trade sector, the annual labor productivity • CCA measure considered: installation of air conditioning systems as a low-regret losses of up to approximately €40 million for 2016–2045 and up to €140 million for option 2036–2065. The damage to the overall economy will be three to four times higher if • CCA benefits: for cooling adaptation measures (that is, increase in the share of air the interrelations with other sectors are considered. conditioning systems), a 20% increase will result in a benefit of €1.5 billion (17% loss reduction), a 50% increase will result in a benefit of €3.7 billion (40% loss reduction), and doubling the share of air conditioning systems would have resulted in a benefit of €5.9 billion (64% loss reduction). WILDFIRE HAZARD/IMPACTS FROM CLIMATE CHANGE ON FORESTRY Macro-structural models: Macro-structural models: (nothing found in the literature) (nothing found in the literature) CGE models: CGE models: Changes in forest yields/net physical wood production (baseline and future climate, ideally for various combinations of RCPs and SSPs, multiple time horizons and return periods) 83 COIN. 2014. The Impact of Climate Change on Labour Productivity in the Austrian Manufacturing and Trade Sector. Link. 84 The Institute of Economic Structures Research (GWS). 2022. Schäden der Dürre- und Hitzeextreme 2018 and 2019: Eine ex-post-Analyse. Link. ANNEX 3. Details on Costings of cca Measures in Case Studies 189 IMPACTS FOR CURRENT AND FUTURE CLIMATE IMPACTS CONSIDERING ADAPTATION/COSTS OF ADAPTATION Example Austria Case study:85 Example Austria case study:86 • Losses in timber production • Assess the current adaptation deficit and the potential future costs of adaptation up to 2050 at the national level • Hazard: rising temperatures and decreased precipitation as a result of climate change as well as possible damages caused by the spruce bark beetle • Hazard covered: natural and climate hazards including flooding, mass movements, and heat stress • Time horizon: two scenario periods, 2016–2045 and 2036–2065 • Time horizon: 2050 • Climate scenario: moderate climate scenario with a mean temperature rise of +1.0°C in the first scenario period (2016–2045) and +2.0°C in the second scenario • CCA cost estimate: adaptation in the forestry sector leads to an annual total cost of period (2036–2065), comparing the reference period (1981–2010) around €300 million per year, with a shift in expenditure towards more machinery, capital, and labor as well as construction • Result: for the forestry sector itself, additional average annual costs of approximately €150–230 million are expected to arise over 2014–2039 and 2044– • CCA macroeconomic effect: for the forestry sector, adaptation could lead to a 2069. Moreover, if the economic interrelations with other sectors are considered, 47% reduction in GDP loss, 39% reduction in welfare loss, and 35% reduction in then the annual average cost will increase to €463 million between 2036 and 2065. unemployment due to climate change compared to the baseline scenario; positive GDP and welfare effects primarily due to the reduced damage to protective forests, which lead to reduced loss in timber production and more public means available to increase transfers to households Source: World Bank based on COACCH (2019); COACCH (2021); COACCH (2022); COIN (2015); COIN (2014); PACINAS (2017) The Institute of Economic Structures Research (GWS) (2022); World Bank and European Commission (2021). 85 COIN. 2015. The Impact of Climate Change on Timber Production in Austria. Link. 86 PACINAS. 2017b. Macroeconomic Effects of PUBLIC adaptation to Climate Change. Link.; Bachner et al. 2018. ANNEX 3. Details on Costings of cca Measures in Case Studies 190 Aurelia Table 17. Examples of CCA measures considered for climate proofing of transport networks in Aurelia (non-exhaustive list) MEASURES (Multi-hazard) Pave roads and railways with durable, climate-resilient materials (Flood) Elevate and install watertight barriers for railways (Flood) Establish barriers and water buffering for roads and highways (Flood) Improve drainage of roads and highways (Flood) Implement slope embankments to allow water runoff to the side and away from the road (Flood) Use large foundations to ensure bridge stability for scour protection (Flood) Restore floodplains to control river flooding in areas near major transportation networks (Flood) Implement balancing culverts to accommodate high water volumes resulted from flooding (Flood/storm) Integrate adequate camber design so that high water volume will not accumulate in the road but run through the road and into the drains (Heat) Establish green roofs and vertical green gardens in airports to reduce urban heat island effect (Heat) Use high-standard asphalt binder that can withstand high temperature (Heat/fire) Build pavement with new materials resistant to extreme temperature (Heat/fire) Plant trees and shrubs along roads and highways which could serve as fire breaks preventing wildfires from crossing and blocking roads Table 18. Examples of CCA measures considered for climate proofing of power networks in Aurelia (non-exhaustive list) MEASURES (Multi-hazard) Relocate power plants to places less exposed to hazard risks, especially when the infrastructure exceeds its lifetime or when it can be severely damaged (Multi-hazard) Install backup generators that allow power plants to continue operating even if power supplies are interrupted by hazards (Flood) Enhance power plant protection through the construction of dikes, floodwalls, and other structural defense measures (Flood) Enhance climate resilience of underground pipelines and cable lines ANNEX 3. Details on Costings of cca Measures in Case Studies 191 MEASURES (Flood) Improve dam spill management for hydropower plants, which includes spillways, gated systems, and fuse plugs (Flood) Use stainless steel materials to reduce corrosion from water damage (Flood) Elevate electrical and mechanical facilities above the flood level (Flood) Use water resistant materials, such as plaster-based coating or water-repellent mortar, to enhance flood resilience of power stations (Fire) Upgrade the electricity distribution network to reduce wildfire risk from powerline ignition (Fire) Establish fuel breaks and security buffer zones (Fire) Upgrade the electricity distribution network to reduce potential wildfires sparked by powerlines (Heat/drought) Improve cooling capacity for nuclear or solar power plants (Heat/drought) Build electric cable lines and power stations with new materials resistant to extreme temperature (Heat/drought) Establish effective water reuse and water collection system as a part of the power plant Table 19. Examples of CCA measures considered for climate proofing of selected critical infrastructure buildings in Aurelia (non-exhaustive list) MEASURES AGAINST MULTIPLE HAZARDS HEALTH EDUCATION CP (Multi-hazard) Implement gas-fired on-site cogeneration (CHP) to provide efficiency and redundancy for power generation in the event of X grid loss or diesel generator issues (CHP infrastructure is on the roof as are emergency diesel generators) (Flood) Place the first-floor elevation at least 9 meters above the projected 500-year flood elevation while maintaining universal access X for rehabilitation patients (Flood) Install flood shield and elevate floodwall X X (Flood) Place all critical patient care functions above first floor X (Flood) Place all critical mechanical/electrical infrastructure on the roof and above flood elevations to minimize possibility of interruption X (Flood) Elevate utilities and install check valves in sewer traps to prevent flood water backup. Construct interior barriers to stop low- X level floodwater from entering basements. Seal walls in basements with waterproofing compounds to avoid seepage. Ensure that future climate flood elevations/storm intensity are considered when retrofitting or designing. (Flood) Flood resistant landscaping - using plants/rain gardens and landscaping techniques/permeable paving that can help absorb X excess water and reduce runoff ANNEX 3. Details on Costings of cca Measures in Case Studies 192 MEASURES AGAINST MULTIPLE HAZARDS HEALTH EDUCATION CP (Flood/heat) Implement stormwater runoff measures and extensive green roofs to mitigate stormwater discharge during heavy rainfalls X and support heat resilience (Heat) Ensure high-performance envelope, including triple-glazed windows and exterior shading, to improve thermal performance X and prevent low interior temperatures/freezing if heating is lost in winter months or overheating if cooling or ventilation is inoperable in summer months (Heat) Incorporate key operable windows in patient rooms, so that if the building cooling or ventilation system is inoperable, indoor X overheating can be avoided in summer months and patients can shelter-in-place (after Hurricane Katrina in New Orleans, United States, indoor temperatures in sealed hospitals exceeded 100 degrees, which prompted staff to break windows with furniture to provide ventilation) (Heat) Provide improved facades for cooling (reflective materials, overhangs, shading devices, green roofs, greening of adjacent areas X (Heat) Create green schoolyards to reduce urban heat island effect X (Heat) (a) Use of heat-resistant materials, high solar reflectance, high infrared emittance, external and internal shading, insulation and X cool roofs to help reduce heat absorption and maintain lower indoor temperatures, improving/increasing natural ventilation to enhance airflow, air-conditioning, and high-performance glazing; (b) upgrading cooling system and implementing energy-efficient cooling systems; and (c) green, blue, grey, and hybrid infrastructure via incorporating green spaces to provide natural shade, green roofs, and biophilic design, improve air quality, and reduce the urban heat island effect while integrating blue infrastructure, such as water features and permeable surfaces, to aid in cooling and contribute to a more resilient environment (Heat) Install photovoltaic on the roof, which can serve as a shading device to a roof to decrease heat gains and reduce cooling load X X (Heat/fire) Provide improved/electrified HVAC; electrification will end dependence on fossil gas-powered machines and reduce GHGs X (Heat/fire) Provide improved filtration systems for smoke reduction and enhanced indoor air quality (IAQ) X (Heat/fire) Build with non-toxic materials that are recycled or produced in a way that conserves raw materials and reduces cost while X streamlining water and energy consumption (Heat/drought) Implement rainwater harvesting and storage system on roofs; the rainwater storage location should be protected from X X sunlight (Fire) Ensure existing and new building exterior facades are non-combustible (that is, fire requirements, weather requirements, and X structural requirements are considered and compatible) (Fire) If near a WUI, maintain a defensible space. This can include fire breaks and defensible space by clearing vegetation, maintain X lawns, and using non-combustible materials for landscaping within a specified perimeter (trim trees within 5 feet of structure, use fire- resistive construction materials on roof and structure, remove plants within 5 feet of the structure, keep 5 feet of non-combustible space around a structure, clear dead vegetation away from trees, keep lawns mowed) (Fire) Install fire-resistant windows and shutters to protect against embers and radiant heat; ensure roof and gutters are maintained to X prevent accumulation of debris that could be flammable ANNEX 3. Details on Costings of cca Measures in Case Studies 193 MEASURES AGAINST MULTIPLE HAZARDS HEALTH EDUCATION CP (Fire): Fire-rated barriers (or detached buildings) for rooms storing hazardous materials X X (Wildfires): Implement building reinforcement options including fire-proof roofs, install spark arresters, install metal screens to cover all X X X vents, use metal gutters, use double or multi-paned tempered glass windows, use non-flammable building material for buildings, decks, and fences (Passive survivability) Provide thermal safety by demonstrating indoor conditions will never breach specified overheating and under- X X X heating thresholds during peak summer and winter analysis periods or provide standard effective temperature (SET) or achieve passive house certification (PHIUS) (Passive survivability) Provide backup power for critical loads by meeting thermal safety criteria or at least three or more of the following X X X power demands: • Operation of electrical components of fuel-fired heating systems • Operation of a fan sufficient to provide emergency cooling • Operation of water pumps if needed to make potable water available to occupants • Appropriate lighting levels • Operation of providing online access • Operation of one elevator in building (hospitals) • Clean fuels: fuel-fired backup generators must be able to operate on clean burning fuels and fuels that can be stored on-site More details on the review of building code related to fireproofing can be found in Box 17: BOX 17. FIREPROOFING BUILDING CODE IN AURELIA Upon review of the existing fire safety ordinances and legislation, it is found that there is exercise on recommended provisions for fire safety buildings in the WUI as part of the guidance to prevent the spread of fire and smoke within the building, to prevent fire from existing building codes and legislation and to provide example costing for upgrades to spreading to neighboring buildings, ensure appropriate egress to enable people to leave incentivize owners and developers to apply enhanced fireproofing design strategies to the building unharmed, and ensure the rescue of protection of workers. The legislation institutional buildings such as fire stations. Potential WUI design and retrofit strategies discusses the determination of safety distances at the building level, but it does not can be placed at three scales: (a) macroscale: landscape scale is associated with large discuss elements to reduce wildfire risk encroaching buildings within the wildland urban forestry and operational management strategies (for example, landscape design, fuel interface. In addition, there is discussion about health care facilities but not specifically reduction planning, and management of strategic points for suppression); (b) mesoscale: fire rescue service buildings. While the country does have specific building design corresponds to the level where preventative and protective measures to keep settlements guidance and regulation for fire safety of buildings, it does not yet have codes regarding safe (fuel reduced strips around communities, water supply points, and so on); spatial arrangements that can deter wildfire spread especially in the WUI. In addition, (c) microscale: defensible space, design, and so on.87 Aurelia’s ordinance focuses on the there is limited information available on the costs of fire safety for enhanced building microscale, although more information on macro- and meso-scale interventions could requirements. Therefore, the country, along with its technical experts, undertakes an help reduce susceptibility to wildfires in the WUI. 87 Vacca et al. 2020. ANNEX 3. Details on Costings of cca Measures in Case Studies 194 ANNEX 4. References Ackerman, F., and E. Stanton. 2006. Climate Change: The Costs of Inaction. Report to Friends of the Earth England, Wales and Northern Ireland, Global Development and Environment Institute, Tufts University. Link. Aerts, J. C. G. H. 2018. A review of cost estimates for flood adaptation. Link. Africa Development Bank. 2019. Climate Change Impacts on Africa’s Economic Growth. Link. Alexandre, S., et al. 2019.. 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