AdaptCost
Briefing Paper 2: Investment and Financial Flow Analysis and Other
Approaches for Aggregated Adaptation Needs for Africa
Key Messages
1.
Estimates of the economic costs of adaptation require investigation of several lines of evidence.
These range from case studies of projects and plans through to global scale assessment. Each of
these evidence lines brings insight into a complex area, where we have relatively little information.
2.
Much of the existing evidence focuses on the costs of enhancing climate resilience in future
investment (‘climate proofing’). This investment and financial flows (IFF) approach has mostly been
undertaken at a global scale. However, it is possible to disaggregate the African component of these
studies. These approaches and other top-down analysis have been reviewed in this paper.
3.
In the short-term, up to 2012, estimates of the immediate adaptation financing needs for Africa are $ 1
to 2 billion a year, to undertake vulnerability assessment, build capacity, pilot adaptation, and tackle
immediate hazards (SEI, 2008); these costs will rise in the future, possibly to $ 3 billion/year by 2030.
4.
The additional costs of ‘climate proofing’ investment is typically estimated at $7 to $10 billion/year by
2030 for Africa, based on UNFCCC estimates (2007). However, recent studies consider that this may
be a major underestimate, not least because of an ‘adaptation deficit’ to current climate in Africa. This
needs to be made good and the costs of removing the deficit in Africa has been estimated at $60 to
several hundred billion/year, though this deficit is not attributable to climate change. If such a deficit
was addressed, there would need to be a further $3 to 12 billion/year by 2030 to make it climate
resilient (which would be attributed to climate change). Overall, the total attributable costs of climate
proofing investment to future climate change could be a factor of 2 to 3 higher than the UNFCC
estimates, estimated in this note as $12 to $28 billion/year by 2030 for Africa.
5.
There are also some studies that count the additional costs for social protection, to protect livelihoods
and health related to climate, which estimate an additional $12 – 17 billion/year is needed for Africa
currently (2015), with this number potentially increasing in future years up to 2030.
6.
These aggregate (top-down) studies provide useful information and the range cited appears
reasonable. However, there is low confidence in these estimates for a number of reasons. The
methods do not directly address the uncertainty in future climate scenarios and subsequent impacts.
Actual adaptation strategies and measures are not evaluated, nor are the benefits of adaptation.
Adaptation to future climate is not disaggregated from future socio-economic change. The estimates
do not include the additional costs of residual damages after adaptation. These points are important
when comparing against other estimates and for the adaptation negotiation and financing discussions.
7.
In conclusion, the total adaptation costs for Africa are strongly influenced by the boundaries. The
lowest estimates here are associated with the additional costs needed to address future climate
change, with immediate (current) needs estimated at several billion/year, rising to a minimum of $10
billion/year by 2030, though these estimates could be an underestimate by a factor of 2 – 3.
8.
Higher estimates are derived when additional costs are included to address the adaptation deficit and
to increase social protection. However, these upper estimates are based on current deficits to the
existing climate, and are associated with development, rather than future climate change (though they
are essential steps in enhancing future resilience).
9.
Detailed IFF studies are emerging. UNDP has developed country and sectoral level guidance which
is being trialled for six Africa countries. This will allow more accurate aggregate of likely adaptation
financing needs by country (bottom-up) and allow a more accurate African estimate in the future.
1
economic costs of adaptation in Africa. The
briefing note does not necessarily represent the
official views of the sponsors or the host
organisations.
Background
The IPCC 4th Assessment Report (AR4) reported
that the literature on adaptation costs and benefits
was ‘quite limited and fragmented’ (Adger et al,
2007i). Similarly, the OECD study on adaptation
costs and benefits (Agrawala and Fankhauser,
2008ii) found little quantified information available.
Global Estimates
At the global scale, six assessments had reported
on the costs of adaptation by late 2008. These are
presented in Table 1, as reviewed by the OECD
study (Agrawala and Fankhauser, 2008). The six
studies were all rapid assessments, undertaken
within a similar period. As reported by OECD,
many of them share common or linked methods,
and they cannot be treated as independent lines of
evidence. The estimates have generally increased
over time. The latter estimates broadly align with
figures reported by the UNFCCC, UK Government,
and others, of ~ $100 billion a year by 2030 for
adaptation financing needs.
In the absence of detailed estimates of adaptation
costs, alternative approaches have emerged for
estimating adaptation funding needs.
These
approaches estimate the likely costs of planned
adaptation based on relatively simple top-down
approximations. Nearly all of these estimates are
provided for a common future base year of 2030,
though there are estimates of immediate needs.
Most of these studies are focused on the costs of
‘climate-proofing’ future investment, or more
accurately, enhancing climate resilience iii, often
known as investment and financial flow analysis
(IFF).
Table 1. Estimates of Costs of Adaptation on a
Global Scale (OECD, 2007).
They use a range of approaches but provide a
guide to adaptation financing needs.
Some
studies also use similar approaches to estimate
additional categories of adaptation where funding
will be required, such as capacity building or
humanitarian aid, or working from other cost
estimates such as the National Adaptation
Programmes of Action (NAPA). All of them adopt a
highly aggregated approach and do not work from
the direct costs and benefits of adaptation actions.
Many of these studies are focused at the global or
continental level. The numbers for non-Annex I
parties have become the subject of considerable
interest in the context of the International
negotiations and the potential requirements for the
future Adaptation Fund. Indeed, these investment
cost numbers are widely in the negotiations, often
assuming a confidence in the empirical base that
is not warranted.
This briefing note reviews the methods and
estimates in this area. It is one of a series of
briefing notes from the UNEP sponsored
AdaptCost project1, which is investigating the
Study
Cost of
Adaptati
on
Regional
coverag
e
Time
frame
Sectors
World
Bank
(2006)
$ 9 to 41
billion/yea
r
Developi
ng
countries
Prese
nt
Unspecifi
ed
Stern
Review
(2006)
$ 4 to 37
billion/yea
r
Developi
ng
countries
Prese
nt
Unspecifi
ed
Oxfam
(2007)
.
Min, $ 50
billion/
year
Developi
ng
countries
Prese
nt
Unspecifi
ed
UNDP
(2007)
.
$ 86 to
109
billion/yea
r
Developi
ng
countries
2015
Unspecifi
ed
UNFCC
C
(2007)
.
$ 28 to 67
billion/yea
r
Developi
ng
countries
2030
See *
UNFCC
C
(2007)
.
$ 44 to
166
billion/yea
r
Global
2030
See **
* Agriculture, forestry, fisheries, water supply, health, coastal
zones, infra-structure
** Agriculture, forestry, fisheries, water supply, health, coastal
zones, infra-structure
Source: OECD, 2008 (Agrawala and Fankhauser, 2008), Table
2.6.
1
The AdaptCost project benefits from related projects
funded by DFID and DANIDA (Economics of Climate
Change in East Africa) and the EC (ClimateCost).
2
These
studies
provide
useful
contextual
information on potential adaptation financing costs,
but they are at best illustrative in terms of the
accuracy of the reported values, not least because
they bear little direct relationship to the costs and
benefits of climate change and actual adaptation
strategies and measures.
Note that the number that has been quoted in
some recent discussion of the adaptation financing
needs for Africa ($67 billion) appears to be based
on this global number without adjustment.
Overall, the global value corresponds to 0.2-0.8%
of global investment flows or 0.06 - 0.21% of
projected GDP in 2030. This study had a more indepth analysis, considering adaptation by sector,
using different methods, and with more detail in
some sectors (e.g. coasts).
Despite these large uncertainties, the estimates
have been useful in helping to guide donors on the
potential costs of building climate resilience into
development, and also in starting the discussion
on the potential adaptation funds needed for
developing countries in the context of the
forthcoming negotiations on adaptation funds.
However, the total numbers are dominated by
infrastructure, the analysis of which is based on
the method from the World Bank (2006) study, on
the proportion of vulnerable infrastructure and the
% costs to build resilience (5-20%).
The World Bank study (2006iv) was the first of
these studies, and adopted a top-down
approximation to estimate adaptation financing
needs. It estimated the portion of investments
sensitive to climate risk, and then combined these
with an estimate of the additional cost to reduce
the risk (as a % of the investments). The final
study, in Table 2 below, by the UNFCCC (2007v),
adopted a more detailed approach, and is the
most widely cited of the studies.
Estimates for Africa
Following the global estimates presented above,
studies have estimated the costs of adaptation for
Africa using scaling or similar approaches. These
are summarised in the sections below.
1) African Development Bank: Rain or
Shine (Van Aalst et al, 2007)
Table 2. Estimated additional investment and
financial flows needed for adaptation in 2030
(billions of US dollars) (UNFCCC, 2007).
Sector
Investment Flow
In developing
countries
Agriculture, forestry
& fisheries
$14 billion/yr
$7 billion/yr (50%)
Water resources
.
$11 billion/yr
$9 billion/yr (80%)
Coastal Zones
.
$11 billion/yr
$5 billion/yr (45%)
Human health
.
$5 billion/yr
$5 billion/yr (all)
Infrastructure
.
$8 to 130 billion/yr*
$2 to 41 billion/yr
TOTAL
$49 to 171
billion/yr
$28 – 67 billion/yr
(57% to 39%)
One of the earliest interpretations of the
investment flow analysis numbers to Africa was
undertaken by the African Development Bank (van
Aalst et al, 2007vi). The study used the initial
World Bank 2006 global estimates of US$ 9–41
billion per year and estimated the cost of ‘climate
proofing’ new investments for Africa. This study
(and method) infers adaptation costs from core
flows of development finance.
The approach starts with an estimate of
investment by finance source, and the portion of
investments that are sensitive to climate risk. It
then estimates the additional cost (as a %) to build
in a greater resilience to climate change, and
reports this as the estimated cost of adaptation.
These
estimates
are,
inevitably,
rather
approximate.
Source UNFCCC 2007. Table IX-65.
It estimated the potential increase in global
investment flows at $50 to $170 billion/year by
2030, of which $28 to $67 billion/year was
anticipated in developing countries (Non-Annex1
parties).
The resulting estimates are a cost of US$ 2 to 7
billion/year (around 0.5% of Africa’s GDP), shown
in Table 3 below.
3
For coasts, the analysis uses the DIVA model, and
this provides direct estimates of additional
investment needed for coastal infrastructure for
Africa in 2030, and assuming anticipation to 2080.
Of the total global value (of $11 billion), around 1213% of investment flows are estimated to Africa,
with estimates of $1.2 to 1.3 billion/year in 2030.
Table 3. Estimated annual costs of adaptation
in context of new investments in Africa
(AfDB 2007)
Investment in
Billion
US$/yr
Proportion
sensitive to
climate
change
Estimated
costs of
adaptatn
Adaptatn
costs
(billion
US$/year)
ODA+CF
35
40%
10-20%
1.4 – 2.8
FDI
30
10%
10-20%
0.3 – 0.6
200
2-10%
10-20%
0.4 – 4.0
DFI
.
.
For agriculture, there is no specific split for Africa,
only an estimate of a total of $ 14 billion in
investment and financial flows of which $ 7 billion
would be needed in developing countries in 2030.
We assume a significant proportion of this would
be in Africa, and use an indicative range of $1 to 2
billion/year by 2030.
2.1 – 7.4
Total
For water, the study estimates the global
investment and financial flows needed for 2030 for
economic growth, population growth and for
adaptation to climate change at $ 720 to 898
billion. A large proportion of this is attributed to
Africa, with values of $ 223 to 233 billion for Africa
(scenarios B1 and A1B respectively, equivalent to
31% and 26 % of the estimated global costs). The
fraction of the change in investment attributable to
climate change (alone) is estimated at one quarter,
thus $56 to 58 billion for Africa. This is the amount
needed for change by 2030. Assuming that
funding is provided through grants for a 20-year
period, the additional investment and financial
flows needed for adaptation would be about USD
2788 –2913 million/year in 2030 for Africa.
ODA = Official Development Assistance
CF = Concessional Finance
FDI = Foreign Direct Investment
DFI = Domestic Financed Investment
Source Van Aalst et al, 2007 (AfDB), based on World Bank,
Organization for Economic Cooperation and Development
(OECD)/AfDB, United Nations Economic Commission for Africa
(UNECA). Table A2.1.
The numbers are, of course, highly sensitive to the
assumptions of future finance flows, the fraction of
the portfolio that is vulnerable, and the costs of
adaptation % applied.
This study also estimated the additional costs to
safeguard the effectiveness (climate-proofing) of
new AfDB/African Development Fund (ADF)
investments, which estimated additional resources
of the order of US$300 million/year.
For health, the analysis is based on the global
burden of disease report, and the estimated cases
of diarrhoeal disease, malnutrition and malaria.
This has separate values for Africa, shown below.
Note this excludes public health infrastructure
investment associated with health, and so is
considered an underestimate.
The figures of investment flows do not take into
account large scale growth of these investment
flows or possible linkages to climate policy (for
instance, the economic stimulus of increased
investment).
The UNFCCC estimates the additional global
financial flows needed in 2030 for addressing the
estimated global burden of disease at between
$3.8 to 5.4 billion/year, but does not produce
values by region. However, a high proportion of
the incremental cases are in Africa, thus a high
proportion of the investment costs will be also.
Indicative estimates can be derived by scaling the
global costs by the relative number of cases in
Africa vs. globally (i.e. assuming equal incremental
2) UNFCCC (2007) Estimates:
Separating out the Estimates for Africa
The UNFCCC (2007) estimates of global
adaptation needs of $50 to $170 billion/year by
2030, presented in Table 2 above, have some
geographical splits, with estimates for Africa.
These have been used to derive a UNFCCC
consistent set of numbers for Africa.
4
cost per case – a very indicative approach only).
This leads to the following values.
meeting in June 2008 (SEI, 2008vii). Although it
considered some investment type analysis,
working with the UNFCCC (2007) estimates, it also
developed an alternative approach, reported
below.
For infrastructure, the UNFCCC study splits out
additional investment costs needed to adapt to
climate change risks in 2030 for Africa is: 1) US$
22 – 87 million based on Munich Re data
(assuming 0.7% is vulnerable to climate change,
based on data from weather related losses); 2)
US$ 92 – 371 million based on ABI data that 2.7%
is vulnerable. In both cases, it assumed a markup of 5-20% for the increased costs of adaptation.
Note that the total investment costs for Africa are
less than 1% of the total global investment costs –
a point picked up in the later IIED/Grantham study.
This used a simple framing exercise to provide
illustrative estimates of the costs of adaptation in
Africa, based on the process of adaptation, from
assessing current vulnerability to rolling out large
scale interventions. This is an aggregated bottomup approach, including consideration of the ability
to absorb funds in the short term and building on
development effortsviii.
It considered the
immediate (2012) and longer-term (2030) funding
requirements. The categories included:
The estimates are brought together in the Table
below. They indicate estimates for the additional
financial flows for adaptation for Africa in 2030 of
US$ 7.2 to 9.9 billion/year, slightly higher than
the upper AfDB estimate above.

Assessing vulnerability. While some urgent
needs are established through the NAPAs and
National Communications, there remain gaps
at country level, and more importantly, for
regional and African-wide analysis. The study
considered a minimum programme of US$ 2
million per country in the period up to 2012,
plus additional regional analysis, with the
funding needed doubling by 2030.

Building capacity.
While this is hard to
estimate, basic institutional capacity is lacking
in Africa, and this is needed as a pre-cursor to
additional investment for climate adaptation. A
range of urgent needs were estimated for
national programmes on the order of US$ 4
million each per year per country up to 2012,
with an annual budget for African-wide and
regional centres of excellence and supporting
networks of US$ 150 million. These would
rise in future years (to $215 million by 2030)
with expanded networks of professionals,
better information systems and multistakeholder processes.

Piloting adaptation. Again, this is a necessary
stepping stone prior to full-scale adaptation
implementation. The study estimated an initial
portfolio of adaptation projects with 500
projects each requiring US$ 0.5 million/year. In
future years this would reduce as operational
funding took over.

Operational adaptation. This focuses on
funding needed to cope with new hazards and
conditions. It identified immediate short-term
programme to cope with near-term hazards, at
Table 4. Estimated additional investment and
financial flows needed for adaptation in 2030
for Africa (billions of US dollars) derived from
estimates in UNFCCC (2007).
Sector
Global
In Africa
Agriculture,
forestry &
fisheries
$14 billion/yr
Not provided,
assume $1000 $2000 mil./year *
Water resources
.
$11 billion/yr
$2788 – 2913
million / year
Coastal Zones
.
$11 billion/yr
$528 – 612 mil/yr
(2030)
$1197 – 1319 mil/yr
(2080)
Human health
.
$5 billion/yr
$2166 – 3328
million/yr
Infrastructure
.
$8 - 130
billion/yr*
$22 - 371 million/yr
TOTAL
$49 - 171
billion/yr
$7173 - 9931
million/yr
* Indicative estimate for Africa, based on total of $7000
mill/year for developing countries.
3) SEI (2008) Briefing for AMCEN on
Adaptation for Africa
An alternative approach was taken in the report of
SEI for a briefing paper for the 2008 AMCEN
5
around $2 million / year per country, rising to
$10 million / year by 2012, and four times that
level by 2030.
This is primarily a review of the numbers cited in
the UNFCCC (2007) study, i.e. those presented in
Table 2. It highlights that the UNFCCC study, and
similar ones, have a number of deficiencies. It also
undertakes a re-assessment of the UNFCCC
estimates, and on the basis of this, suggests these
previous numbers are a substantial underestimate. It highlights the uncertainties and underestimates as:
The estimates are reported in the Table below.
Overall, the analysis estimates adaptation funding
needs for Africa at an annual cost of US$ 1 to 2
billion by 2012, rising to up to $ 3 billion by
2030.
Table 5. Estimated adaptation financing needs
for immediate and medium-term for Africa
(millions of US $ / year) (SEI, 2008).
Sector
Up to 2012
2012 - 2030
Assessing
vulnerability
$110 million/yr
$220 million/yr
Building capacity
$350 million/yr
$500 million/yr
Piloting
adaptation
$250 million/yr
Included in
below.
Operational
adaptation
$100 - 500
million/yr
$500 - 2000
million/yr
$810 to 1210
million/yr
$1220 – 2720
million/yr
TOTAL

Some sectors were not included (e.g.
ecosystems, energy, mining. manufacturing,
retailing, and tourism). Cost estimations for
ecosystems, although made, were left out of
the final table due to a lack of sufficiently
robust information.

Some sectors were only partially covered. In
health, just three impacts were included - the
effect of climate change on diarrhoeal
diseases, malaria and malnutrition in low and
middle-income countries, as these were the
only areas where sufficient estimates were
available.

In most cases, the UNFCCC estimation of
funding needs was derived from applying an
increase in cost to those areas of investment
that are deemed to be climate-sensitive. In
agriculture for example, 2% of investment on
infrastructure is taken to be climate-sensitive.
In some sectors, particularly the built
environment, the investment flows are so large
that even small changes in this mark-up can
change estimates significantly.

The additional costs of adaptation have
sometimes been calculated as ‘mark-ups’
against low levels of assumed investment.
This was identified as a particular issue for
infrastructure for Africa. Moreover, only large
events were included, rather than all extreme
weather disasters, and the climate sensitive
fraction of 1- 3% is low (and could be as high
as 40% for ODA). .
Source SEI (2007).
A key point here is that many of these categories
are additional to the investment flow numbers
shown in Table 3. and 4 The estimated costs in
2012 are all considered additive to any investment
flow assessment, though piloting adaptation and
early operational adaptation potentially overlap
with some NAPA projects. The numbers for
assessing vulnerability and building capacity in
2030 are also additional.
The category of
operational adaptation may involve some overlap
with investment flow estimates, but the focus on
other categories (e.g. disaster risk reduction, nontechnical or community based adaptation), means
that we consider these estimates should be added
to the estimates of climate proofing investments.
For these reasons, the study considered the
UNFCCC estimate of investment needs was
probably an under-estimate by a factor of between
2 and 3 for the sectors included, outlined in the
table below. It highlights the total could be much
more if other sectors are considered.
4) IIED and Grantham Institute (2009):
Assessing the Costs of Adaptation to
Climate Change
One of the most recent reports is the
IIED/Grantham Institute study on assessing the
costs of adaptation (Parry et alix).
The simplest way to translate the IIED/Grantham
findings through to the investment costs is to
6
simply uplift the existing UNFCCC estimates
upwards by a factor of two to three. If this was
applied to the indicative numbers for Africa
outlined in Table 4, of $7.1 to 9.9 billion /year, then
this would imply adaptation financing needs of $14
to $30 billion for Africa by 2030 alone. This is a
significant increase on most other estimates.
suggests sectoral under-estimates may be more
important for Africa than for other global regions.
A particularly relevant area of criticism in the IIED
report is over the low levels of assumed current
investment in Africa. The report argues that
applying a ‘climate mark-up’ to infrastructure is not
appropriate when current investment flows are well
below what they should be. This latter point is
highlighted in the context that in some parts of the
world, notably Africa, low levels of investment
have led to a current adaptation deficit, defined as
where ‘current levels of investment are considered
far from adequate, and lead to high current
vulnerability to climate, including its variability and
extremes, the latter case being termed a current
‘adaptation deficit’. This partly explains why
impacts from climate change are expected to be
greatest in low and middle- income countries
(IPCC, 2007).’x
Table 6. Summary of IIED/Grantham (2009)
findings on the UNFCCC (2007) assessment
Sector
UNFCCC
costs
$billion/yr
Commentary on UNFCCC
estimates
Agriculture
forestry &
fisheries
$14
billion/yr
Considers a reasonable first
approximation
Water
resources
$11
billion/yr
Considers a potentially
substantial under-estimate, due
to omission of flood risk, water
transfers, and ensemble range
Coastal
Zones
$11
billion/yr
Considers underestimate by
factor of 3 due to higher potential
sea level rise
Human
health
$5
billion/yr
Considers underestimate as only
includes 30-50% of extra
disease burden from climate
change in developing countries
Infrastructure
$8 - 130
billion/yr
Consider major underestimate
as low levels of future
development in some regions
(so less infrastructure to protect),
only large events, and relatively
low mark-up.
Ecosystems
Not
included
Omitted in UNFCC so
underestimate (cites $65–$300
billion/yr)
Other
sectors
Not
included
Not included
TOTAL
$49 - 171
billion/yr
Considers investment
needs are 2 – 3 times
higher than UNFCCC
The adaptation deficit was not included in the
UNFCCC estimate, as it is not an additional cost of
anthropogenic climate change.
However, the
report highlights that this adaptation deficit will
need to be made good by development funding,
otherwise the funding for adaptation will be
insufficient to avoid serious damage from climate
impactsxi.
As outlined in the report, the Millennium
Development Goals represent an attempt to make
good some, but not all, of the adaptation deficit,
and have been costed at about $200 billion by
2015 (Sachs and McArthur, 2005). The report
estimates that to make good the full development
deficit probably requires enhancing official
development assistance to 0.7% of GDP of OECD
countries.
Note: data of population (2006), GDP (2006, PPP), and
land area with high human impact, used here were
obtained from WHO statistics, UN data, the World
Factbook (2006), FAO dataset, and Yale University
2005 Environmental Sustainability Index (ESI). Note
scaling by the GDP in 2030, rather than currently, would
make a difference to the numbers, and is a source of
uncertainty given these apply to future investment flows.
The issue for Africa is whether the ‘climate markup’ should be against investment levels that reflect
current trends (which in many regions, of Africa
are insufficient to remove high levels of
vulnerability to climate), to elevated levels that are
needed to attain the MDGs, or to even higher
levels that would help achieve sustainable and
equitable development. The UNFCCC takes the
first of these, thus gave low numbers for
infrastructure in Africa. The IIED/Grantham study
estimates that removing the housing and
infrastructure deficit in low- and middle-income
However, the IIED/Grantham study has a specific
commentary on the infrastructure values for Africa,
which would lead to different estimates than the
generic factoring upwards used above.
This
7
countries will cost around $315 billion per year (in
today’s figures) over 20 years; while adapting this
upgraded infrastructure specifically to meet the
challenge of climate change will cost an additional
$16–63 billion per year.
Table 8. Implications of IIED/Grantham (2009)
findings on UNFCCC (2007) assessment with
Africa specific considerations for 2030
To derive this figure, the IIED/Grantham assumes
$500 per person is needed for investments to
meet the deficits and deficiencies in infrastructure
provision to meet the Millennium Development
Goals (based on the estimate of around
$1000/person needed meet the Millennium
Development Goals between 2005 and 2015,
(Sachs et al., 2005) and assuming 50% of this is
for infrastructure. This gives a regional total
required over a ten-year period for Africa of $516
billion. It then assumes the same level again is
needed to remove the infrastructure deficit
completely in the period 2015 – 2030. It also adds
additional costs in this period for expanding
housing & infrastructure for growing urban
populations at a further $200 billion. This makes a
total over the period 2015 – 2030 of $1232 billion.
It is then assumed that an additional 5% or 20%
investment is needed to make this investment
climate resilient. This leads to the estimates for
Africa below. The value for Africa ($3.1 to 12.3
billion a year) is a large proportion of the global
adaptation deficit proofing ($16 to $63 billion).
Total costs (US$
billion) of:
1232
61.6
Adapting to
climate
change (5%)
61.6
3.1
Adapting to
climate
change (20%)
246.4
12.3
IIED/Grantham
implied estimate
for Africa
Agriculture,
forestry &
fisheries
Not provided,
assume $1000 $2000 mil./year *
Not amended,
though potential
deficit here also
Water
resources .
$2788 – 2913
million / year
Not amended.
Coastal Zones
.
$528 – 612 mil/yr
(2030)
$1197 – 1319
mil/yr (2080)
High estimate *3
$528 – 1836
mil/yr (2030)
$1197 – 3957
mil/yr (2080)
Human health
.
$2166 – 3328
million/yr
Assume 50% of
total, thus $4332
– 6656 million/yr
Infrastructure
.
$22 - 371
million/yr
$3.1 to 12.3
billion a year*
TOTAL
$7173 - 9931
million/yr
$12397 - 27846
million/yr
In practice, this leads to an estimate of $12.4 to
$27.8 billion for Africa, which is very similar to
using the simple factor of 3 multiplication above.
Note the IIED report also implies a very large
increase in funding for the adaptation deficit, in
addition to the climate resilience needed in the
table above. These additional costs are not
attributable to climate change, and so instead
would be needed from development funding.
Annual costs
over 20 years
(US$ billion) of
Removing the
infrastructure
deficit
UNFCCC
indicative for
Africa
* Based on climate resilience for increased infrastructure,
associated with meeting the MDG and the adaptation deficit.
Table 7. Total estimated costs for removing the
housing and infrastructure deficit by 2030 plus
additional total costs for adapting to climate
change in Africa (IED, 2009)
Africa
Sector
The other area where the report highlights an
important omission is for biodiversity and
ecosystem services. These are very important for
Africa, because the population and economy has
such a reliance on these services. The underlying
papers for the UNFCCC (2007) used work by
James et al. examined the relatively modest goal
to increase protected (terrestrial) areas by 10 per
cent. They examined two options for this, based
on different options for redressing the current lack
of resources going to conservation, and estimated
that improving protection, expanding the network
in line with IUCN guidelines, and meeting the
opportunity costs of local communities could all be
Source IIED/Grantham, Parry et al, 2009. Chapter 6. David
Satterthwaite and David Dodman
The various sectoral estimates for Africa from the
IIED/Grantham study are used to derive a
continent specific value for Africa, below.
8
achieved with an annual increase in expenditures
of USD 12 – 22 billion. Including non-protected
area, and including marine protected areas would
lead to larger costs. Note this is the investment
needed to meet current natural ecosystem
protection needs, and does not consider any
additional requirements for protecting natural
ecosystems from climate change (e.g. through the
use of migration corridors for species to migrate as
climate zones shift).
million to $20 million per country, though there are
some countries with much higher estimates.
When the main projects are added together, they
total $560 millionxii.
Benin
Burkina Faso
Burundi
Cape Verde
Central African Republic
Comoros
The additional costs of adaptation for natural
systems are therefore potentially large, and would
increase the estimates for Africa further.
Democratic Republic of Congo
Djibouti
Eritrea
Ethiopia
Gambia
Finally, the IIED/Grantham report raises further
issues:





Guinea
Guinea-Bissau
The shape of the marginal cost curve for
adaptation, i.e. that it will probably be very
inexpensive to avoid some impacts but
prohibitively expensive to avoid others; and
some impacts cannot be avoided even if funds
were unlimited.
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
The level of adaptation to aim for, whether all
impacts, the economically rational (benefits
exceed costs), or in relation to available funds.
Mozambique
Rwanda
Sao Tome and Principe
Senegal
Residual damages need to be evaluated and
reported (see later discussion in this note).
Residual impacts were estimated at about a
fifth of all impacts in agriculture in 2030 and,
over the longer term, for up to two-thirds of all
potential impacts across all sectors, depending
on the amount of climate change not avoided
by mitigation.
Sierre Leone
Sudan
Tanzania
Uganda
Zambia
0
10
20
30
40
50
60
70
Total NAPA Cost ($Million)
Source: UNFCCCxiii: notes excludes large infrastructure
projects in Ethiopia and Gambia, which then lead to values in
excess of $ 100 million.
The potential for soft adaptation. In reality, it
will often be cheaper to apply ‘soft adaptation’
options. Measures to use water more
efficiently, for example, may obviate the need
for expensive new infrastructure.
Their primary strength is that they are based on
real needs, based on consultation with
stakeholders and assessed at a micro-scale. They
therefore provide a better reflection of local needs,
and capture elements missed by many of the
aggregate studies above. They do, however, only
focus on the most urgent adaptation issues and do
not investigate longer term issues (nor consider
avoided benefits directly). In some instances, the
NAPAs also lack a certain degree of transparency
regarding the process by which estimates are
derived, not least in relation to the size of the costs
The shape of the adaptation cost curve after
2030.
5) Use of the NAPAs
A number of studies have used estimates provided
in the NAPAs (National Adaptation Programmes of
Action, produced for Least Developed Countries).
Estimates of the African NAPAs that cite costs are
shown below. Costs are mostly in the range $5
9
80
estimates produced (which partly relate to the size
of likely available funding).
and that the costs of social adaptation will go up
between 2015 and 2030.
It is also possible to extend these cost estimates to
all of Africa, to give continental wide estimates of
immediate financing needs.
Such estimates
transfer likely costs in one country to another,
using countries with similar geographical contexts.
The resulting estimates are therefore only as
reliable as the costs identified in the original
country, and they assume climate variation and
that climate vulnerability is similar in both
countries.
These numbers align with the analysis in the
sections reported above, i.e. around $1 billion (up
to 2012) (based on the SEI estimate) for
immediate adaptation financing needs, $8-9 billion
by 2030 for climate proofing (similar to the
estimates above of $ 7 to $10 billion from deriving
UNFCCC numbers for Africa) and additional costs
for social protection. The higher estimate of $60
billion adds in the higher costs and the adaptation
deficit identified by the IIED/Grantham study.
A more practical use of the NAPAs is as a guide to
priority adaptation projects, and building a bottomup assessment of what stylized projects would be
required in various sectors. This is the adaptation
signature approach being developed by the SEI,
initially for agriculture and water.
The report has some recommendations by sector.
 For agriculture, to develop and climate-proof
agricultural
productivity
by
improving
agricultural techniques and adopting higheryielding, climate-proofed crops. It reports the
UNFCCC estimates that this would cost an
additional $1 billion per year by 2030, on top of
development spending. It would also require
capability building, access to new agricultural
techniques and inputs (seeds, fertilizers, and
pesticides) and large scale dissemination of
know-how.
 For water, to climate-proof water infrastructure
and re-shape demand patterns to respond to
climate change. It estimates that across the
continent this initiative would require additional
adaptation funding of $3–3.5 billion per year
by 2030. It would take integrated action in four
main
areas:
first,
making
strategic
development choices that reflect water
demand; second, factoring climate change into
the design and planning of water productivity
and efficiency in farms, factories, and cities;
third, climate-proofing existing and new water
supply infrastructure; and fourth, leap-frogging
to new water supply solutions that save both
energy and carbon (e.g., solar desalination),
rather than following earlier development
paths. Funding may be needed to cover
incremental costs of supplying water under
climate change: more demand for water,
higher water provision costs, and more public
goods such as research and capability
building.
 On cities and infrastructure, to climate-proof
urban infrastructure and development. It
highlights that cities challenged by climate
change will require extra adaptation resources
6) Grantham Institute (2009)
The Grantham Research Institute on Energy and
Climate Change has also undertaken a similar
review of the potential IFF costs for Africa. This
was published in the working papers for the
African Partnership Forum and Conference of
African Heads of State and Government on
Climate Change (CAHOSCC), at the special
session on climate change in September 2009xiv.
This reports that the incremental development cost
(or adaptation cost) and the cost of putting Africa
on a low-carbon growth pathway could amount to
$22–31 billion per year in 2015 ($13–19 billion and
$9–12 billion). Existing estimates suggest these
costs could be $52–68 billion per year by 2030
($21–27 billion for adaptation and $31–41 billion
for mitigation).
On adaptation, it reports that reconciling various
estimates indicates adaptation costs could be
$21–27 billion per year by 2030, including $1
billion per year for adaptation capability building,
$8–9 billion per year for anticipatory adaptation
and climate-proofing, and up to $12–17 billion per
year for social protection (which includes
protecting livelihoods and health). However, these
costs could rise to close to around $60bn per year
if the infrastructure needs in Africa up to 2030 are
greater than assumed in the UNFCCC estimates
10

(which it estimates at up to $0.4–1.4 billion per
year by 2030) to deal with more extreme
weather such as storms, and threats to city
defences such as coastal flooding. Initiatives
to support adaptation include increasing
access, building and reinforcing infrastructure,
and protecting coasts.
For health, it highlights adaptation resources
can be used to reduce vulnerability to climatesensitive disease and malnutrition. It estimates
this could lead to $3 billion per year in
incremental costs by 2030. Opportunities
include improving forecasting and diagnostic
capabilities, broadening access to health
services to address these diseases, and
applying greater resources and co-ordination
in dealing with humanitarian disasters.
8) UNDP Guidance on IFF
UNDP have recently produced guidance on
Investment and Financial Flow (IFF) Analysis for
mitigation and adaptationxv. The guidelines have 9
steps in undertaking an IFF analysis.
The paper also sets out the areas of mitigation
potential for Africa, and key issues for a common
negotiation position.
7) World Bank Economics of
Adaptation to Climate Change
The Economics of Adaptation to Climate Change
(EACC) Study.
This estimates the costs of
adaptation – in $Billion/year over future decades,
as shown in the figure below, using two future
climate projections. Further details will be
considered in the national to sector briefing note.
30
There has been a pilot study for Tanzania. The
method is being tested in the following African
countries (as well as other countries world-wide).
•
Algeria.
•
Niger.
•
Togo.
•
Liberia.
•
Gambia.
•
Namibia.
28 28
Adaptation Cost $Billion/year
NCAR
25
CSIRO
22
19
20
15
23
16
15
13
10
5
Note that in the future, it should be possible to
start combining country level IFF estimates, and
interpreting these in relation to Africa wide
adaptation financing needs.
0
2010–19
2020–29
2030–39
2040–49
Costs of Adaptation in Africa.
World Bank, EACC, 2009.
Note figures include Middle East, as these are included within
category of North Africa. However, numbers are dominated by
costs in sub-saharan Africa.
11

Strengths and Weaknesses
The investment and financial flow assessments
are based on rather arbitrary proportions of
investment expenditure that are sensitive to
climate change, and very uncertain ‘mark-ups’.
The robustness of this approach is questionable,
being dependent primarily on the degree to which
expenditures are climate sensitive now and in the
future in the different geographical contexts to
which they are applied. There is also very limited
evidence for the percentages used. In some
sectors, particularly infrastructure, the investment
flows are so large that even small changes in this
mark-up can change estimates significantly. The
estimates also have no direct link to adaptation
project costs and benefits, and involve major
uncertainties in scaling up to continental scale
(e.g. by ignoring the spatial pattern of development
and climate change they ignore adaptation needs
for specific locations and vulnerable groups).
They also omit a number of sectors, and have
partial estimates in others.
He concludes that on balance, the estimates tend
to under-estimate likely adaptation costs.
Table 9. Summary of strengths and
weaknesses of aggregate approaches
However, their great strength is that they are less
data intensive than other methods, and provide
first estimates of potential adaptation costs in the
absence of other data. It is not unreasonable to
assume that the lower estimates are a minimum
requirement, while the upper estimates depend
more critically on assumptions about futures that
cannot be verified.
Fankhauser, in the IIED/Grantham report, does
assess the potential bias in the estimates,
considering:

The scope of the analysis (whether all relevant
impacts and countries are covered), which
could significantly lead to underestimates.

The focus on hard adaptation, and a lack of a
cost-effectiveness
check,
which
might
overestimate.

The depth of analysis (whether, for a given
impact/country, all relevant adaptation options
and needs are considered), again a potential
underestimate.

The costing of measures (whether all relevant
costs
are
included)
and
potential
underestimation.
The treatment of uncertainty (how uncertainty
about future change affects costs).
Approach
Strengths
Weaknesses
Top-down
investment flow,
e.g. AfDB,
UNFCCC
Provides rapid
initial estimates,
especially
where lack of
data
Questionable
robustness.
Heavily
dependent on
assumptions of
sensitivity and
mark-up for
investment,
uniformity across
sectors and
geographical
areas
Indicative
country level
estimates of
aaptation
needs, e.g. SEI
Provides
information on
areas omitted
by other studies
such as
capacity
building
Very indicative
only, no
disggregation by
size or funding
needs
NAPA based
Based on real
needs,
assessed at a
micro-scale, and
local needs
Focus on most
urgent adaptation
issues and shortterm. Issues with
transferability.
All
Provide
indicative
numbers to
work with while
gaps in
evidence are
filled
No direct
relationship to the
actual costs of
adaptation, or
benefits.
Likewise, the SEI study involves very simplistic
assumptions, and similar funding flows for all
countries, which are not based on likely needs or
potential impact. It is therefore is only indicative,
but the strength is that it includes categories
omitted in other studies, such as building capacity.
It was intended as a framework for defining the
range of plausible estimates.
Scaling costs from the NAPAs (National
Adaptation Programmes of Action) has the
advantage that they are based on real needs,
based on consultation with stakeholders and
12
assessed at a micro-scale. The weaknesses are
that they only focus on the most urgent adaptation
issues and do not investigate longer term issues
(nor consider avoided benefits directly), and there
are some issues over whether these represent
independent estimates of resources required.
When estimates are extrapolated to give wider
coverage this increases the uncertainty, and
assume that the climate variation and climate
vulnerability be similar in both countries.
Source: SEI
Source:
World
Bank
Social
adaptation
The approach also relies on caricaturing sectoral
impacts and responses, such that they may not be
comprehensive, and estimation outcomes may be
sensitive to differences in modelling assumptions.
Critical assumptions need to be made regarding
the characterisation of the physical and social
systems modelled, and careful sensitivity analysis
is needed as a result. This approach allows one to
measure adaptation costs for various scenarios in
the future. This is explored more in the later
section on national and sectoral based analysis.
Source:
Grantham
0
5
10
15
20
$Billion/year
Estimates of Adaptation Costs 2010-2015
Immediate
priorities +
capacity
building
The review has found a number of estimates of the
costs of adaptation for Africa. A number of the
main estimates are summarised in the graphs
below, for the 2010-2015 period and for 2030,
showing the different components or categories of
adaptation, which are considered additive.
Low
Source: Grantham
High
Source: SEI
Source:
UNFCCC
Enhancing
resilience
(anticipatory)
Comparing Estimates

High
Source: Grantham
Costs of
adaptation
It is possible to use more sophisticated top-down
analysis and involve technical consideration of the
interaction between climate and investment. This
approach allows estimates of adaptation costs to
reflect the differences – conditions and needs across countries though it is not sufficiently
disaggregated to capture site-specific differences.

Low
Immediate
priorities +
capacity
building
Source
Parry et al
Social
adaptation
Source:
Grantham
Source:
Parry et al
Resilience to
deficit funding
For the early financing needs (2010 – 2015),
shown in the top figure. All three categories
can potentially be added together to give the
total adaptation costs (though they may be
some overlap between the studies).
Costs of
adaptation
(overlap above)
For 2030, shown in the bottom figure, the first
four categories can potentially be added
together to give the total adaptation costs,
though there may be some overlap between
them. The final category of ‘costs of
adaptation’ is likely to overlap with the other
categories.
Source:
World
Bank
0
5
10
15
20
$ Billion/year
Estimates of Adaptation Costs 2030
13
25
Interpreting Estimates to the
Methodological Framework
Some care is needed in interpreting these values,
especially in the context of negotiation
discussions. This can be illustrated by referring
back to the illustrative outline of the economics of
adaptation, presented in the methodology note
(briefing note 1).

The AfDB, WB and UNECA (2006) estimated
the annual cost of US$ 2 – 7 billion for Africa
(around 0.5% of Africa’s GDP).

An interpretation of the UNFCCC (2007)
numbers for Africa leads to estimates of US$
7.2 to 9.9 billion/year by 2030.

Factoring in the potential underestimate in
these numbers, as highlighted by IIED (2009),
would lead to higher adaptation financing
needs of $12 to $30 billion by 2030 for Africa
b) With climate change
Additional studies have looked at other elements.
d) Costs of adaptation

The SEI study for AMCEN estimated
immediate adaptation priority needs, to
undertake vulnerability assessment, build
capacity, pilot adaptation and tackle immediate
hazards at $1 to $2 billion/year up to 2012,
rising to $3 billion a year by 2030.

The National Adaptation Programmes of
Action identified urgent adaptation needs to
avoid impacts, particularly agriculture and the
water sector, but also for health, coastal zones
and extreme events. The African NAPAs that
cite costsxvi are mostly in the range $5 million
to $20 million per country, and added together
they total over $300 million.

The Grantham Institute study (2009) estimates
that the additional costs for social protection,
to protect livelihoods and health related to
climate, could be an additional $12 – 17
billion/year for Africa currently, potentially
increasing in future years up to 2030.
c) Residual cost
a) Future baseline
Framework for adaptation costs and benefits.
Investment flow estimates only include adaptation
costs. They do not include the additional costs of
residual impacts, i.e. the economic costs that will
still occur even with adaptation in place, as
adaptation reduces but does not remove all the
impacts of climate change. This is the line shown
in green above. Moreover, they do not split out
the effects that would have occurred anyway from
socio-economic change, i.e. in the absence of
future climate change – shown as the blue line
above - and implicitly include the gross effects of
socio-economic and climate change together.
Finally, some estimates include the additional
costs to make countries resilient to the current
climate, i.e. to address the ‘adaptation deficit’ –
these would be additional to the future effects of
climate change shown in the diagram above.
However, these damages are not attributable to
climate change and are can be considered part of
the future baseline (the blue line).
The total adaptation costs for Africa are strongly
influenced by the boundaries.
The lowest
estimates here are associated with the additional
costs needed to address future climate change,
with immediate (current) needs estimated at
several billion/year, rising to a minimum of $10
billion/year by 2030, though these estimates could
be an underestimate by a factor of 2 – 3. Higher
estimates are derived when additional costs are
included to address the adaptation deficit and to
increase social protection. However, these upper
estimates are based on current deficits to the
existing climate, and are associated with
development, rather than future climate change
(though they are essential steps in enhancing
future resilience).
Conclusions
The investment and financial flow analysis studies
provide estimates of adaptation financing needs to
make current investments ‘climate resilience’. A
number of estimates have been made, or derived
in the AdaptCost study, summarised below.
14
The AdaptCost Project
proofing’ would be ‘building climate resilience’, assuming a
satisfactory level of tolerated risks and impacts.
iv
World Bank (2006), ‘Clean Energy and Development:
Towards an Investment Framework’, Washington, D.C: World
Bank.
http://siteresources.worldbank.org/Devcommint/Documentation/
20890696/DC2006-0002(E)-CleanEnergy.pdf
v
UNFCCC (2007). Investment and financial flows relevant to
the development of an effective and appropriate international
response to Climate Change (2007). United Nations
Framework Convention on Climate Change
vi
van Aalst, M., Hellmuth, M. and Ponzi, D. (2007) Come Rain
or Shine: Integrating Climate Risk Management into African
Development Bank Operations. Working Paper No 89. African
Development Bank, Tunis.
vii
SEI (2008). Scoping Paper for Climate Change Adaptation in
Africavfor the Ministerial Session and Expert Group: Segments
of the Dialogue on Climate Adaptation. Lead authors: Downing
(SEI) and Youba Sokona (OSS). African Ministerial
Conference on Environment. Expert consultation on adaptation:
8 June 2008. Ministerial session: 12 June 2008.
viii
This approach is expanded in briefing notes on adaptation
signatures for agriculture and water (forthcoming).
ix
Martin Parry, Nigel Arnell, Pam Berry, David Dodman,
Samuel Fankhauser, Chris Hope, Sari Kovats, Robert Nicholls,
David Satterthwaite, Richard Tiffin, Tim Wheeler (2009)
Assessing the Costs of Adaptation to Climate Change: A
Review of the UNFCCC and Other Recent Estimates,
International Institute for Environment and Development and
Grantham Institute for Climate Change, London.
x
Whether development increases or reduces vulnerability to
climate is problematic in practice. Counterfactually, a high-cost
development infrastructure might increase economic impacts of
major climate events and climate change, particularly given the
lack of consensus in long-range forecasts of climate conditions.
xi
This is a similar argument as used by others for including
poverty reduction as part of the cost of climate change
adaptation.
xii
Note this excludes the large infrastructure projects in Ethiopia
and Gambia.
The AdaptCost Africa project, funded by United
Nations Environment Programme (UNEP) under
the Climate Change – Norway Partnership, is
producing estimates of climate adaptation in Africa
using different evidence lines. The study aims:
 To help African policymakers and the
international climate change community to
establish a collective target for financing
adaptation in Africa.
 To investigate estimates to adapt to climate
change and improve understanding of
adaptation processes. This will provide useful
information
for
planning
adaptation
programmes and support decision-making by
national governments and multi- and bilateral
donors by allowing them to better compare
projects and policies on their economic
grounds. In the process, countries will also
gain a better understanding of their adaptation
investment requirements, and build a stronger
basis for articulating their financing priorities
and attracting capital.
This briefing note was prepared by Paul Watkiss
Tim Taylor, Tom Downing and Jill Dyszynski.
Footnotes and References
i
Adger, W.N., S. Agrawala, M.M.Q. Mirza, C. Conde, K.
O’Brien, J. Pulhin, R. Pulwarty, B. Smit and K. Takahashi,
2007: Assessment of adaptation practices, options, constraints
and capacity. Climate Change 2007: Impacts, Adaptation and
Vulnerability. Contribution of Working Group II to the Fourth
Assessment Report of the Intergovernmental Panel on Climate
Change, M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der
Linden and C.E. Hanson, Eds., Cambridge University Press,
Cambridge, UK, 717-743.
ii
Agrawala, S. and Fankhauser, S. (Eds.) (2008) Economic
Aspects of Adaptation to Climate Change: Costs, Benefits and
Policy Instruments. OECD
iii
The term ‘climate-proofing’ is considered inappropriate for
three reasons. First, it is not possible to reduce all climate risks
to zero - there will nearly always be residual impacts or risks.
Second, it is not economically efficient - climate proofing all
activities through adaptation would be extremely expensive and
there would be many cases where benefits would not exceed
costs. Third, actors will make their own judgments about
expected outcomes and their investments and resource
management decisions. They cannot, and should not, be forced
to accept no climate risks as a target, and may not be risk
minimisers for all activities. A better definition for ‘climate-
xiii
http://unfccc.int/cooperation_support/least_developed_countrie
s_portal/napa_project_database/items/4583.php
xiv
African Partnership Forum and Conference of African Heads
of State and Government on Climate Change (CAHOSCC), at
the special session on climate change. September 3rd 2009,
Addis Ababa.
http://www.uneca.org/apf/index.asp
Grantham Institute (2009). Possibilities for Africa in global
action on climate change.
Executive Summary. July 2009
Documents available at:
http://www.uneca.org/apf/documents.asp
xv
http://www.undp.org/
xvi Burundi, Comoros, Congo, Djibiuti, Eritrea, Guinea, Lesotho,
Madagascar, Malawi, Mauritania, Rwanda, Senegal, Sudan,
Tanzania, Uganda, and Zambia.
15