Assessing the economic impacts of climate change in Nepal
Project reference: AAAS-0011
Previous studies, and common sense, tell us that development in Nepal is already being affected by climate change. Economic growth is dependent on the agricultural sector, which is sensitive to variations in the climate. Extreme events, such as glacial lake outburst floods, threaten lives and livelihoods.
However, the Government of Nepal (GoN) still does not have a clear idea of the expected economic cost of climate change. In their 2011 National Climate Change Policy they included as a specific objective the “assessment of losses and benefits from climate change in various geographical areas and development sectors by 2013”
Drawing inspiration from the Stern Reviews in the UK, the Economic Impact Assessments will allow the GoN to highlight both within Government and beyond, that climate change is an economic and development issue of the highest priority. It will also go one step further and model the efficiency of different policy options and identify climate compatible development pathways. The GoN can also use these studies to make the case for accessing international sources of climate finance.
The 18 month project which began in March 2012 is being implemented by a consortium of IDS-Nepal, Practical Action Consulting (PAC) Nepal, and the Global Climate Adaptation Partnership (GCAP). The project is led by a Government Steering Committee, chaired by the Ministry of Environment, Science and Technology and officials and experts from the line ministries.
The project team is using an approach that builds on, but goes beyond, what has been done elsewhere by the World Bank, UNDP, UNFCCC and others. Rather than a classic scenario based assessment in the long term, this project will also consider current variability and take into account immediate policy options, capacity issues and the practical issues of implementing climate compatible development.
The assessments will therefore be carried out under the following four streams of work:
1) Costs of current climate variability and extremes in Nepal: Analysis of near term economic costs, including potential impacts from changes in climate variability. It will identify and cost immediate short-term actions, focusing on no-regret options. This has a strong linkage with the existing National Adaptation Plans of Action (NAPA) and Local Adaptation Plans of Action (LAPA) processes.
2) Risks to current plans over the short-medium term in Nepal: An initial risk screening of the potential impacts of climate change on current plans, i.e. the associated economic costs, and will then look at the options for addressing these.
3) Longer term impacts of climate change to Nepal: More traditional analysis of the impacts and economic costs of climate change in key sectors, using a scenario based impact assessment approach, and then look at the options to address these, where possible, assessing the costs and benefits of alternative options.
The synthesis task will bring this information together, and build up a climate compatible development pathway, which addresses the combined risks over time.
A single economic model will not be used, rather a combination of tools and approaches, combining high-level aggregate analysis (e.g. broad estimate of % GDP loss), national sectoral modelling (e.g. agricultural yield analysis) and more local studies (e.g. water catchment for a vulnerable river basin).
The agriculture and water sectors will be the primary focus of the study, however cross-sector linkages between them, and wider multi-sector links, will also be considered. For both, sub-sectoral analysis will provide a more detailed assessment, for example between cereals versus export crops. In addition, the approach allows for the national analysis to be broken down for specific regions or case studies.
To ensure the final assessments are relevant and used, the project includes the following elements:
1) The assessment is carried out by a partnership between the local and international suppliers, thereby ensuring the project targets both a national and global audience.
2) Capacity building component to ensure the local research community and the Government can understand, use and replicate the assessments.
3) The Government owns the process and outputs of the project, by chairing the Project Steering Committee and giving the overall direction of the project.
4) The process and findings of the project will be disseminated extensively, locally and globally utilising CDKN’s network of partners.
During the crucial four month inception phase, the project team and the Government will synthesise the available information on climate change in Nepal and sources of data, finalize the scope and approach of the project and forge links with partners and other initiatives. The final implementation plan is expected in July 2012.
Find more details of the project in the introductory presentation from the project team.
CDKN funding: £350,000
Project Manager: Elizabeth Colebourn, CDKN Asia
Image courtesy of CCAFS Nepal @ flickr creative commons