Despite concerted efforts to curb global greenhouse gas emissions, the impacts of climate change are intensifying and causing mounting losses and damages, some of them irreversible. This chapter reviews the current state of play of climate hazards, exposure and vulnerability as well as reviewing key projected impacts under current emissions reductions scenarios. It considers progress made on advancing adaptation efforts and highlights the urgent need to accelerate adaptation action and to build climate resilience systemically. However, it also shows that there are limits to adaptation that reinforce the need to overcome the compartmentalisation of climate policy into adaptation and mitigation.
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Climate and Economic Resilience in a Changing World
11. Climate impacts, adaptation needs and limits
Abstract
This chapter draws on contributions to the horizontal project carried out under the responsibility of the Environment Policy Committee.
Despite concerted efforts to curb global greenhouse gas emissions, the impacts of climate change are intensifying and causing mounting losses and damages – some of them irreversible – for communities across the globe. This chapter briefly reviews the current state of play of climate hazards, exposure and vulnerability as well as key projected impacts under current emissions reductions scenarios. It underscores the urgent need to accelerate adaptation action and build climate resilience systemically.
Observed climate impacts
Despite efforts to mitigate global warming, climate change has already induced considerable costs and threatens the stability of many natural and human systems, including human health, terrestrial and aquatic ecosystems, cities, infrastructure, and food production. Average global surface temperature increased by 1.09°C in 2011-20 compared to the period 1850-1900, with larger increases over land (1.59°C) than the ocean (0.88°C) (IPCC, 2021[1]).
All regions of the world have suffered negative impacts from climate change (IPCC, 2021[1]). Flooding from storm surges combined with sea-level rise increasingly threaten the habitability and economic structures of coastal areas (OECD, 2021[2]; OECD, 2019[3]). Rising average and extreme temperatures, particularly in urban areas, are leading to increased heat-related morbidity and harm to human mental health (OECD, 2021[4]). Climate change is fuelling extreme wildfires, which increasingly threaten communities and cause irreversible environmental damage (OECD, Forthcoming[5]). Slow-onset impacts also threaten many parts of the world. Some 250 million people are affected by desertification (IPCC, 2019[6]) and more than 13% of the Earth's soils are affected by salinisation (FAO, 2021[7]). Other negative climate impacts include droughts, average temperature increase, land and forest degradation, ocean acidification, glacier melting and biodiversity loss.
Climate variability and climate-related events are responsible for increasing economic cost, but also human and environmental losses. The year 2022 saw the driest summer recorded in European history, inducing the loss of more than 660 000 hectares of land due to extreme wildfires and forecasted agricultural yield losses of up to 16% compared to the annual average of the past five years (Toreti et al., 2022[8]). In 2021 alone, the global direct costs of extreme climate-related events were estimated at EUR 265 billion (Munich Re, 2022[9]). Single events such as Hurricane Ida in the United States and catastrophic flooding in western Germany caused EUR 60 billion and EUR 40 billion in direct damages respectively (Munich Re, 2022[9]).
The impact of these events goes beyond their economic cost. They affect people’s health and lives, and temporarily or even permanently disrupt the functioning of critical ecosystems. More recently, flooding in Pakistan caused more than 1 200 fatalities and displaced millions (Mallapaty, 2022[10]). Australian wildfires that ravaged the southeast of the country in 2019-2020 destroyed 18 million hectares of vegetation and killed an estimated one billion animals (UNEP, 2020[11]). Some experts argue that the destruction of the local biodiversity in this region of Australia has been so extensive that it may not be able to regenerate without human intervention (UNESCO, 2021[12]). Such extreme events can have significant and lasting mental health impacts, such as post-traumatic stress disorder (OECD, 2021[13]).
Figure 11.1. Mean annual change in the number of unusually warm days over the period 1979-2021
Source: (Maes et al., 2022[14]).
These climate impacts are the result of increasing climate risk caused by a combination of hazard, exposure, and vulnerability (Box 11.1) (OECD, 2021[13]). Advances in the understanding of climate systems strengthen the attribution of these impacts to climate change (IPCC, 2021[1]). For example, a recent study shows that climate change made the European drought of 2022 more than 20 times more likely (Schumacher et al., 2022[15]).
Climate change is characterised by an increase in global average temperatures, which in turn changes weather patterns, leading to an overall increase in the frequency and intensity of climate hazards. As illustrated in Figure 11.1 above, almost all countries experienced a significantly higher number of extremely warm days in recent years compared to the reference period 1981-2010. Similarly, the analysis also reveals fewer unusually cold days in recent years compared with the past reference period (Maes et al., 2022[14]). These climatic changes present risk affecting communities, disrupting economic activities and/or causing environmental damage and degradation. As shown in Figure 11.2 below, populations in each region of the United States, Chile, Mexico and Colombia have been significantly more exposed to heat stress in the last five years compared to the period 1981-2010 (Maes et al., 2022[14]).
The vulnerability of societies to climate impacts is a function of their exposure to the hazard in general, and their adaptive capacity or ability to cope with related impacts. The Intergovernmental Panel on Climate Change (IPCC) estimates that, at present, 3.3 to 3.6 billion people globally are highly vulnerable to climate change (IPCC, 2022[16]).
Climate change impacts are not evenly distributed. Developing countries, in particular least developed countries, are more exposed to climate hazards geographically and more vulnerable to their impacts (OECD, 2021[13]). Segments of populations that are marginalised due to gender, race, age, disability, income, or geographic location are particularly vulnerable, both globally and within countries (OECD, 2021[13]). Lack of financial and material resources to recover from climatic events; reduced awareness of the potential risks of climate change and adaptation options; greater dependence on climate-sensitive sectors such as agriculture and fisheries; and lower insurance coverage against risks are all factors that constrain capacity to adapt (Leichenko and Silva, 2014[17]). This inequality in the face of climate risk caused by highly variable exposure and vulnerability reinforces the link between climate action and social resilience.
Figure 11.2. Subnational variation of population exposure to heat stress
Source: (Maes et al., 2022[14]).
Significant progress has been made in the methods and tools used to assess climate exposure. Increasingly accurate weather satellite observation and better modelling tools are improving the capacity to assess local and regional hazards and populations’ exposure to them. The OECD has recently developed country- and regional-level climate exposure indicators (Maes et al., 2022[14]).1 Using a selection and combination of existing climate data, these homogenised indicators allow countries to better understand how climate hazards compare to one another and which regions and activities are most exposed, enabling the prioritisation of adaptation actions. For example, based on this new data, Figure 11.3 depicts the spatial evolution of soil moisture in Europe, Australia, Japan and Korea. The data show that Australia is already facing an increasingly dry environment in all regions, whereas in Spain and Italy some regions are getting wetter and others dryer. Understanding such spatial variation can help policy makers tailor policies to best suit local needs.
Despite this progress, climate risk assessments to date often give only a partial view, focusing exclusively levels of hazard and exposure without characterising vulnerability. Assessing the risk posed by climate change requires information on adaptive capacity or the ability of exposed entities to cope with identified potential negative impacts (Maes et al., 2022[14]).
There is some evidence that this is starting to change. For example, localities in the state of New York, including Orange County2 and the city of Long Beach,3 have included vulnerability studies in their climate risk assessments. These initiatives remain limited to a small number of localities, however. Moreover, vulnerability assessments must be regularly updated to include progress in adaptation but also because they rely on socio-economic and environmental dynamics. As such, comprehensive vulnerability assessments require considerable data and resources to carry out.
Figure 11.3. Soil moisture anomaly 2017-21 compared to 1981-2010
Note: A negative anomaly corresponds to drier soil (red), while a positive indicates an excess of humidity (blue)
Source: (Maes et al., 2022[14]).
Direct climate impacts are initially local, but their effects can spread well beyond the systems and regions originally affected. The interconnectedness of economic, social and natural systems can lead to cascading effects that propagate far beyond their initial impact (OECD, 2022[18]). For example, in 2011, Thailand was hit by remains the costliest flood to date for the insurance industry. The impact of this event, which caused USD 46 billion in damages, went far beyond Thailand's borders, however. Supplying about a quarter of all hard disk drives (HDD) sold in the world, the shutdown of Thailand's HDD industry led to a doubling of global HHD prices and only returned to normal more than a year after the shock (Swiss RE, 2021[19]). Assessing such indirect exposure and predicting likely cascading impacts is a new and major challenge.
Box 11.1. Key concepts surrounding climate change and adaptation
This report uses the Intergovernmental Panel on Climate Change’s (IPCC) Fifth Assessment Report framework (2014) to describe risk. Risks are a function of the range of potential outcomes and the associated likelihoods of those outcomes materialising in a given period. In this context, risks arise from the interaction between hazards, exposure and vulnerability:
Hazards are the potential occurrence of a physical event or trend (e.g. flooding, erosion) that may cause loss of life and injury, as well as damage and loss to property, infrastructure, livelihoods, service provision, ecosystems and environmental resources. Climate change will increase climate risk by leading to a global rise of three kinds of hazards: slow onset changes, extreme weather events and climate system tipping points (for more on climate system tipping points, see Chapter 2). At the same time, climate change will increase the intensity and frequency of extreme weather events (e.g. heatwaves, wildfires, flash flood and droughts), especially in places where they already occur.
Exposure refers to the presence of people, infrastructure, housing and other tangible human assets in hazard-prone areas. A measure of exposure can include the number of people or types of assets in a coastal flood zone.
Vulnerability is the degree to which natural or social systems are susceptible to, and unable to cope with, exposure to hazard.
Source: (IPCC, 2014[20])
Future climate impacts
While a number of climate change-induced impacts are already felt today, future projected climate change is set to intensify climate variability and extreme climate-related events. Even in the optimistic scenario of limiting global warming to 1.5°C above pre-industrial levels, all regions and systems will face a greater impact from climate change than today (IPCC, 2021[1]). With such warming, sea-level rise will continue and could reach 0.5 metres by the end of the century (OECD, 2019[3]). Although an average warming of 1.5°C will partially contain the increase in extreme weather events, it will not prevent the forecasted accumulation of smaller-scale weather events (IPCC, 2021[1]). What is more, the increase in the number of events makes it more likely that these events occur in combination, leading to more devastating compound events (Zscheischler et al., 2018[21]).
Reaching 2°C of global warming will increase the likelihood of many climate impacts and put the world at risk of several tipping points with potentially catastrophic impacts (see Chapter 2). Even without the increased risk of crossing tipping point thresholds, reaching 2°C of warming will result in considerable climate impacts, for example, almost tripling the number of people exposed to extreme heat at least once every five years (OECD, 2022[18]). Failure to meet the Paris Agreement goal of staying below 2°C of warming would have disastrous consequences. As shown in Figure 11.4, at 2°C of warming it is projected that residual damage due to flooding could cost between USD 1.7 trillion and USD 5.5 trillion over the 21st century (OECD, 2019[3]).
These projections show the clear risk of continued warming and the absolute necessity of meeting the Paris Agreement’s mitigation targets. But even at current levels of warming, climate impacts are mounting. Building resilience to them is imperative, not only to avert, address, and minimise losses and damages, but also to enhance the resilience of mitigation efforts and ensure that future climate impacts are not exacerbated.
Figure 11.4. Global annual flood costs for different socio-economic and climate scenarios with and without adaptation
Note: The solid lines represent the median. The shaded area represents the range from the 5th to 95th percentile for a given scenario combination.
Source: (Hinkel et al., 2014[22]).
Aligning climate adaptation policies with expected climate impacts
Against the backdrop of significant observed climate-related losses and damages, and with future impacts projected to intensify, accelerated climate adaptation efforts are urgently needed. Managing climate risks and being prepared for losses and damages requires a broad range of policies at local, national and regional levels, co-ordinating across all areas of government and assessing policy options with regard to managing other socio-economic risks (OECD, 2021[13]). Recognising this, OECD countries and a growing number of non‑OECD countries have made considerable progress in establishing comprehensive climate adaptation policies. For example, all OECD countries have adopted a National Adaptation Strategy (NAS) or Plan (NAP). Many are already moving into their second or third phase, adjusting adaptation objectives and actions according to evolving knowledge on climate risks.
National climate and impact assessments form the basis of National Adaptation Plan priority-setting in a growing number of countries. A recent OECD survey reveals that 73% of OECD countries have developed at least one risk assessment, whereas 60% assess both past and projected climate hazards. Even though 53% of countries report assessing vulnerability to the expected impacts of climate change, assessment methods and their quality (e.g. the degree to which environmental and socio-economic factors are considered) differ considerably.
Good practice NAS/NAPs have started formulating national adaptation objectives and identifying priority adaptation actions. For example, Costa Rica defines a broad adaptation objective for each of its six Axes of Action under its National Adaptation Plan. Each objective is detailed in several sub-objectives corresponding to a specific guideline (Ministry of Environment and Energy, 2022[23]). As another example, Austria sets an overarching objective for each of 14 identified sectors, with detailed sub-objectives needed to meet the main goal, including actions necessary for implementation, actors to be involved, and a time horizon (Austria, 2017[24]).
Some countries have also established indicators to measure progress and designate entities responsible for the implementation and monitoring of respective actions. For example, the United Kingdom’s Climate Change Committee is developing cross-cutting indicators and a monitoring system for each of the 253 actions listed in England’s second NAP.4 The 133 cross-cutting indicators in NAP2 fall into three categories: i) robust assessment of trends in risk factors; ii) adaptation actions; and iii) climate impacts of adaptation actions. The indicators are classified according to each of the NAP areas (Natural environment, Health and the built environment, and Infrastructure and Business) and then grouped according to their adaptation priority; stage of the theory of change to which they relate (input, output, outcome, impact); and by one of three climate risk categories (hazard, exposure, vulnerability).
Recognising the important role of local communities and municipalities in building resilience to climate change impacts, a growing number of countries are strengthening co-ordination and collaboration with local stakeholders. Local governments are increasingly being consulted in the process of designing National Adaptation Plans and policies. National governments are facilitating knowledge sharing and information on climate risks and adaptation options with subnational governments. For example, Japan is sharing information about climate change impacts and adaptation solutions with subnational stakeholders through a Climate Change Adaptation Center (Japan, n.d.[25]). In Austria, the Natural Hazard Overview & Risk Assessment Austria (HORA) platform provides detailed information about local risk to various hazards (Austria, 2017[24]).5 The United Kingdom’s Local Adaptation Advisory Panel (LAAP) is a forum for local government, arm’s-length bodies and national government to discuss climate adaptation. The LAAP helps to identify local adaptation priorities and shares good local adaptation practices among its members and with the national government (Department for Environment, 2018[26]). Colombia has created the Comisión Internacional de Cambio Climático (CICC) to co-ordinate climate action among the national government, territories, and actors in different sectors (Colombia, 2018[27]). National governments have also established guidelines to help all actors address the issue of adaptation.
Similarly, countries are fostering inter-ministerial co-ordination and collaboration to strengthen the mainstreaming of adaptation across government sectors. In Germany, for example, the Interdepartmental Working Group on Climate Change Adaptation (IMAA), composed of representatives from all federal ministries and led by the Federal Ministry for Environment, ensures that federal policies are consistent with climate change adaptation objectives. (BMUV, 2016[28]). The IMAA has been a key actor in developing Germany's adaptation policy framework and is heavily involved in the reporting system (preparation of progress reports, building adaptation action plans, and review and approval of monitoring). Similarly, the UK Climate Change Act established the Climate Change Committee (CCC) an independent statutory body that must provide independent advice to government on climate-related risks and opportunities every five years. The government assesses and responds to this advice in its Climate Change Risk Assessment (CCRA). By law, the government must then update its national adaptation programme every five years to set out government action in response to the risk assessment (DEFRA, 2022[29]).6 The CCC then reports to Parliament on progress being made in preparing for climate change.
Despite the growing comprehensiveness of national adaptation policy frameworks and governance structures, progress on implementation remains insufficient. While limited knowledge and understanding of climate risks remains a major bottleneck to more comprehensive adaptation action, ownership, accountability and financial constraints are also clear barriers to making progress here. In particular, actions identified in National Adaptation Plans need to be implemented by different national, sectoral and subnational government stakeholders, requiring considerable co-ordination. Adaptation funding is rarely sufficient, if provided at all, and often hampers implementation efforts. In addition, most countries rely on soft policy to implement NAPs, without legally binding commitments and based on voluntary, informal or non-hierarchical co-operation. Overcoming this will require a stronger focus on introducing national adaptation laws (European Environment Agency, 2022[30]).
Progress on adaptation made to date often occurs in response to, rather than in anticipation of, weather‑related disasters. For example, catastrophe funds created in Austria and France were the result of major preceding disasters. In Austria, an avalanche in 1951 first raised awareness of the need for federal-level support to help states finance recovery efforts. Subsequent flooding in 1965 and 1966 then led to permanent establishment of a national catastrophe fund. France’s catastrophe fund was established following devastating floods in the country in 1981-1982.
Chapter conclusions
Considerable progress is still needed to build resilience to climate impacts. The lack of funding for adaptation shows that while the need for adaptation strategies and frameworks risk is increasingly recognised, implementing them remains challenging. Overcoming these gaps requires a more holistic approach to building resilience, one that considers the evolution of hazards, exposure and vulnerability and is tailored to regional variation within these categories. Adaptation efforts and overarching governance frameworks need to become proactive, anticipating future risks and building systemic resilience to them. This requires better knowledge of how future climate risks may develop, and an awareness that resilience building cannot focus only on preparing specific system components for specific impacts. A broader approach to systemic resilience is needed.
It should also be recognised that there are limits to adaptation. The IPCC defines these as "the point at which an actor's objectives or system needs cannot be protected from intolerable risks by adaptive action" (IPCC, 2022[16]). Two parameters define the limits to adaptation: the dynamics of climate change and the capacity available to adapt. The IPCC distinguishes between soft limits, those for which solutions are not available due to cost or technical limitations but may be available in the future, and hard limits, for which no additional options will be available.
The current increase in global average temperature is already pushing the world to certain limits of adaptation. Ecosystems and the biodiversity they host as well as some particularly vulnerable areas (small islands and mountainous areas) are experiencing both hard and soft adaptation limits. For example, species extinction and coral reef depletion in some regions is already considered irreversible and is severely impacting local economies and populations The decline of some species in the Arctic is already compromising food security in the region. Soft adaptation limits are being observed in the agriculture sector and in coastal areas, threatening the resilience of households, individuals and urban infrastructure (IPCC, 2022[16]). Increasing evidence that tipping point thresholds may be crossed sooner and at lower warming thresholds than previously thought intensifies the risk that further adaptation limits will be met. These limits reinforce the need for mitigation and exemplify the interlinkages between building resilience to climate impacts and the resilience of the net-zero transition itself.
References
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Notes
← 1. These OECD indicators detail exposure for seven hazard types: (1) extreme temperature, (2) extreme precipitation, (3) drought, (4) wildfire, (5) wind threats, (6) river flooding and (7) coastal flooding, and four exposure variables (1) built-up areas, (2) croplands, (3) forests and (4) population density.
← 4. NAP2 sets out key actions for the period 2018-2023. A third NAP for England is due for publication in 2023.
← 5. For more information on the HORA platform visit https://www.hora.gv.at/.
← 6. The Climate Change Act provides the legal framework for climate change adaptation and mitigation in the UK.