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01/06/2011 - Presentation by the Bank of Greece of a report on the environmental, economic and social impacts of climate change in Greece prepared by the Climate Change Impacts Study Committee

In February 2009, on the initiative of the Governor of the Bank of Greece, Mr. George A. Provopoulos, a Committee of distinguished scientists was set up with the task of preparing a study on the environmental, economic and social impacts of climate change in Greece. Today saw the publication of the Committee’s Report, the fruit of 26 months of research, and the presentation of its findings at a special event at the Athens Concert Hall (Megaron).

The event started with an address by the Prime Minister, Mr. George A. Papandreou. The Report was presented by Mr. Christos Zerefos, member of the Academy of Athens and Coordinator of the Study Committee. Apart from the Governor of the Bank of Greece, Mr. George Provopoulos, other speakers included Ms. Tina Birbili, Minister of Environment, Energy and Climate Change, and Mr. Stavros Dimas, Vice President of the New Democracy Party and former European Union Commissioner for the Environment. The event was coordinated by journalist Nikos Hadjinikolaou.

This Report represents a first attempt at a comprehensive study of the impact of climate change for Greece – in particular of the cost of climate change that would be borne by the Greek economy, the cost of implementing adaptation measures, as well the cost of moving to a low-emissions economy, in the context of the global effort to mitigate climate change. For the first time, this project brought together teams from different scientific disciplines; the teams included physicists of the atmosphere, climatologists and geophysicists, experts in agriculture, forestry and fisheries, as well as experts in water resources, tourism, the built environment and energy, not to mention economists and sociologists.

The study produced climate projections for Greece, in a detailed geographic breakdown up to the year 2100. These data are available to the research community. A series of sectoral studies analysed the biophysical impact of the anthropogenic (human-induced) component of climate change and estimated the costs of climate change, disaggregated by sector, across time horizons extending to 2050 and 2100. The findings of the sectoral studies were then incorporated into a general equilibrium model of the Greek economy, in order to estimate the overall cost of climate change in terms of changes in GDP, social welfare and sectoral output. The sectoral studies also helped define the scope for adaptation to climate change through preventive measures. The next step was to assess the total cost for the Greek economy of adaptation measures, as well as the cost savings that can be achieved thanks to these measures, given that the damage from climate change would be reduced.

The study made climate change projections for the 13 regions into which Greece was divided on the basis of climatic and geographic criteria, while a database and model simulations were developed for the main scenarios of greenhouse gas emissions. According to the climate simulations, it is projected that by the end of the 21st century air temperature will rise considerably, while precipitation countrywide will decrease. At the same time, the intensity of heat waves and the duration of drought spells will drastically increase, resulting, among other things, in a substantially higher risk of forest fires. These changes are expected to have a considerable impact not only on the local ecosystems, but also on a number of fields and aspects of human activity.

Based on the climate simulations, climate change risk and impact assessments were made with regard to water reserves, the mean sea level, fisheries and aquaculture, agriculture and agricultural land, forests and forest habitats, biodiversity and ecosystems, tourism, the built environment, transportation, health and mining. The individual studies present quantified estimates of projected environmental and economic impacts. These estimates could serve as valuable input in the designing of adaptation policies.

Climate change will have a considerable negative impact on many sectors in Greece. Agriculture, forestry, fisheries, tourism, transportation, coastal activities and the built environment in urban centres will all be affected by the rise in air temperature, drought, extreme weather events and the rise in sea level. According to the Report, this impact will lead to lower productivity, loss of capital and additional expenditure for damage repair. Biodiversity, ecosystems in Greece and human health will be negatively affected.

The study estimated that, under a scenario of no action in Greece and at the global level, the cost of climate change for the Greek economy would be very high. Should climate change evolve at the pace projected until 2050 and 2100 without any global effort to reduce greenhouse gas emissions, the cumulative cost for the Greek economy over the period extending till 2100 would amount to €701 billion, i.e. three times Greece’s current annual GDP.

Preventing or mitigating climate change (limiting the increase in air temperature to 2° C) would call for a steady effort to drastically reduce emissions both in Greece and at the global level from now till 2050 and then till 2100. Studies were carried out in depth to determine how Greece could sharply cut its emissions from fossil fuel combustion as well as from industrial and agricultural processes. Considerable effort will be required in the areas of energy conservation, development of renewable energy sources (RES) and the diffusion of new, low-carbon, technologies in all sectors, including transportation. The study estimated that the measures for drastic emission cuts would cost the Greek economy a cumulative total of €113 billion till 2050 or €142 billion till 2100, i.e. more than half of current annual GDP. The benefits, however, would be manifold, considering that the mitigation of climate change, if emission reductions are globally achieved, would reduce the cost of damage from climate change by nearly 60% for the Greek economy (to €294 billion cumulatively till 2100, compared with €701 billion if no action is taken).

Finally, the cost of adaptation to climate change was estimated; this cost corresponds to a long-term investment programme in several sectors to ensure protection from climate change-induced damage. Total investment plus other expenditures required till 2100 would come to €67 billion, i.e. the equivalent of about one third of current annual GDP. This investment – in infrastructure projects in agriculture, transportation, forestry, tourism, in coastal areas as well as in the built environment of urban areas – does not eliminate climate change nor all damage from it, but it does downsize the latter significantly. It was estimated that investment in adaptation measures would cut the cost of damage from climate change by almost 30% (to a cumulative €510 billion by 2100, compared with €701 billion if no action is taken), a cost saving roughly equivalent to current annual GDP. The adaptation policy is of a preventive nature and in any event is deemed advisable in view of the high uncertainty surrounding the effectiveness of global efforts to mitigate climate change by reducing greenhouse gas emissions.

The cost-benefit analysis showed that the policy of mitigation was clearly a better option than inaction, while the policy of adaptation was also found to be of benefit. The study thus makes a clear case for taking action to reduce greenhouse gas emissions in line with the targets set by the European Union; it also points out the urgent need for work to begin on the formulation of a long-term strategy for adaptation measures. Considering that the occurrence of extreme climate events in the future cannot be excluded, policies for mitigation and adaptation should be viewed as contingency measures against such an eventuality; as such, they are advisable irrespective of the results of the cost-benefit analysis.

At first glance, the current adverse economic conjuncture appears to constrain the financing of mitigation and adaptation policies. To the extent, however, that these policies can be exploited as an opportunity for new lines of economic activity and for growth, they can be part of the strategy for a faster exit from the crisis and for setting up a new growth model. In other words, the adoption of mitigation and adaptation policies, rather than being hampered by the grave economic problem faced by Greece today, may actually contribute to its solution.

The social dimensions of climate change impact deserve to be explored further, especially as regards possible increases in poverty and migration, since the effects of climate change and of the policies dealing with it will be most strongly felt by the lower income population groups; these groups lack the necessary resources to address the problems caused by climate change and to finance measures for emission abatement and adaptation.

The speeches delivered at the event, the full report, summaries for individual sectors, and the list of authors-contributors (all in Greek) are available on the Bank of Greece website (www.bankofgreece.gr) under the special section dedicated to the Climate Change Impacts Study Committee.

The Opening address by the Governor of the Bank of Greece at the presentation of the Report, the Foreword and summary of findings of the Report (written by Professor Christos Zerefos, Study Coordinator), as well as the Afterword of the Report are also available in English on the Bank of Greece website.