Economics of Adaptation to Climate Change: Africa Country Studies

The World Bank’s global study on adaptation costs—Economics of Adaptation to Climate Change [1] (EACC)—released in 2009 found that the price tag of adapting to climate change in developing countries to be $75-$100 billion per year for the period 2010 to 2050. While this equals only 0.2% of the projected GDP of all developing countries, it is as much as 80% of total current ODA. For Sub-Saharan Africa, the study estimated annual adaptation costs of $14-17 billion.

A parallel exercise was done in partnership with policymakers and stakeholders in seven countries to understand what these global costs imply for individual countries. The country studies were done to help decision makers better assess climate change risks and design appropriate adaptation strategies. Of the seven, three countries are in Africa—Ethiopia [2], Ghana [3] and Mozambique [4]. 

Given the impacts, the countries will have to avoid, manage and withstand some of these risks with prioritizing actions on adaptation. The studies have overarching lessons for the near-term and the longer term that may offer useful guidance for policy-makers:

Economic development is a central element of adaptation to climate change Cost-benefit analysis of several projects, for example, in irrigation suggests that most of these are good for development as well as adaptation. In Ethiopia, robust growth based on infrastructure investment is the first line of defense against climate change impacts.

However, it should not be business as usual. There is need to invest in human capital, develop institutions, and avoid incentives that encourage development in locations exposed to severe weather risks. Adaptation will require a different kind of development—such as breeding crops that are drought and flood tolerant, climate proofing long-lived infrastructure to make it resilient to climate risks.  For example, in Mozambique, there is need to look at ports like Beira and make sure it is climate-proofed.

Start with actions that make sense even without climate change. All over Africa, these studies show that expanding the road system and increasing the share of paved roads would yield high return by lowering transport costs and expanding markets. They lessen flood impacts and enhance farmers’ ability to respond on changes in agriculture.

Look beyond planned and hard (capital intensive) adaptation to soft (institutions and policies) adaptation. In Ghana, a number of soft measures are recommended over hard ones—including an upgrade of peri-urban slum and controlled development of new ones. In Ethiopia, there is need to look at strengthening social safety nets and crop insurance programs.