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Chatham House
Climate Resilience in China and
the European Union:
Managing Impacts and Adaptation
Beverley Darkin
Interdependencies on Energy and Climate Security
Environment Energy and Development Programme
February 2008
1. Introduction
Much of the focus in the international climate change negotiations and of climate
policy-making generally is directed towards the creation of a low-carbon economy.
However, cutting carbon alone will not solve the climate change problem. Given the
rise of greenhouse gas emissions in the atmosphere, the world is already
committed to climate change. It is true that the severity of impacts we are likely to
encounter will be determined by our ability to slow, stop and reverse emissions
over the coming years. But it will also be determined by our capacity to cope with
the changes to which we are already committed. For this reason it is essential that
governments, industry and NGOs spend more time working out how to create a
climate-resilient economy, as well as a low-carbon one.
As the science becomes ever more certain and observable impacts start to take
hold, governments are showing heightened interest in understanding the effects of
climate change and assessing how best to respond. Since 2006 alone:
-
Parties to the United Nations Framework Convention on Climate Change
agreed the ‘Nairobi Work Programme on Impacts, Vulnerability and
Adaptation to Climate Change’ in November 2006 to help countries
improve their understanding and assessment of the impacts (UNFCCC,
2007). The programme of action was welcomed by the G8 in
Heiligendamm, where G8 leaders emphasized their commitment to
enhancing cooperation with developing countries in the areas of adaptation
and climate research (G8, 2007);
-
The Chinese Ministry of Science and Technology, the Chinese
Meteorological Administration and the Chinese Academy of Science
published China’s first national climate change assessment in December
2006 (MOST et al., 2006), compiled to provide a detailed scientific
foundation for the development of national strategies and polices to tackle
climate change;
-
The European Commission published its first green paper on climate
change and adaptation in June 2007, setting out the case for action and
outlining the policy options available (European Commission, 2007a).
Governments have recognized that in order to undertake impact and adaptation
assessments successfully there is a need to create alliances and learn from
activities that have taken place elsewhere. For example, the European
Commission has identified the need to ‘improve alliances with partners around the
world – particularly in developing countries’ to coordinate action and strengthen
cooperation on climate change adaptation (European Commission, 2007a). China,
in its National Climate Change Action Plan, published in June 2007, has
highlighted that ‘in order to effectively address climate change and implement [its]
national programme, China is ready to strengthen international cooperation with all
countries.’ (NDRC, 2007)
China and the European Union are well placed to act as partners. The EU has
developed some of the most advanced technologies world-wide in the field of
climate observation and undertaken detailed regional impact assessments on
vulnerability and adaptation through the work of the European Environment Agency
(EEA) and the European Community’s Joint Research Centre (EEA, 2004, 2005
and 2007). The EU has much knowledge and experience to share with foreign
partners. Meanwhile, China is working actively to develop expertise in these areas
and collaborate with the international community in order to improve the capacity of
developing countries to act against climate change, particularly against extreme
events, through capacity-building, the provision of financial assistance and
technology cooperation (NDRC, 2007).
There is both an economic and a political rationale for acting together.
Economically, if China and the EU can find ways to undertake technology
cooperation, considerable opportunities exist to generate scale effects in the
production of monitoring and observation systems and adaptation technologies.
Politically, the EU has already taken on a global leadership role in the field of
climate change mitigation, while China acts as a leader among the G77 developing
countries. Cooperating on impacts and adaptation will provide the EU and China
with the opportunity to act as leaders in the development of a climate-resilient, lowcarbon economy.
2. What common impacts and issues will the EU and China
face?
No two regions will face exactly the same set of climate impacts. Even in areas
where the natural topography is similar, social and economic conditions and the
ability of communities to respond to climate change will vary. Nevertheless,
scientific evidence suggests that EU and China will face many common issues over
the coming decades. Four sectors are singled out here to illustrate this point.
Water
Globally, climate change is set to alter temperatures by between 1.8 and 4oC by
the end of this century. Sea levels are expected to rise by between 0.18 and 0.59m
over the same time period (IPCC, 2007). As a result we can expect reduced
access to safe drinking water and an expansion of drought-affected areas. Over
one billion people rely on glacier meltwater for their supplies, which will eventually
disappear (EEA, 2005). Meanwhile, those situated in floodplains and at the coast
will experience increased risk of flooding. Such risks apply to both the EU and
China.
According to the EC Joint Research Centre, mean temperatures have increased in
Europe by 0.8oC since 1900. Annual precipitation has increased by between 10%
and 40% in northern Europe over the last 100 years, while the Mediterranean basin
has experienced a 20% reduction (JRC, 2005). Predictions by the EEA show that
in the period up to 2030 climate change will reduce river flow in southern Europe
and exacerbate already acute water-shortage problems in the more arid south and
southeast. Droughts may increase the risk of forest fires. Meanwhile, higher levels
of precipitation will increase river flow in northern Europe. Extreme precipitation,
particularly in the winter months, will lead to increased flooding and, possibly,
cause a reduction in water quality due to storm water mixing with sewage water.
Changes in the frequency and intensity of drought and flooding may cause
significant financial and human loss throughout Europe (EEA, 2005).
China’s average ground temperature has also increased by 0.5–0.8oC over the last
hundred years, although, unlike Europe, changes in annual precipitation are not
considered to be significant, despite large year-on-year fluctuations. Predictions
show that overall in China the physical impacts of climate change will be very
similar to those mentioned above, but the geographic distribution will be almost the
reverse of Europe’s. It is anticipated that climate change will lead to decreased
precipitation and river flow in the arid north, increasing the number of droughtstricken areas. In contrast, in the south there will be an increase in run-off into
rivers, while floods are predicted to become more severe (MOST et al., 2006).
Overall, the frequency of droughts and floods is set to increase in China, with an
accompanying deterioration in the gap between the demand and supply of water. It
is estimated that by 2050 the areas of glaciers in western China – which have
already retreated by 21% – will have fallen by a further 17% (China Daily, 2007).
The total water available from glacial meltwater will increase in the short term, with
supplies expected to peak between 2030 and 2050 and then fall (MOST et al.,
2006). According to the Stern Report, 23% of China’s population or around 250
million people live ‘in the western region that depends principally on glacier
meltwater’ (Stern, 2006). The impact of increasing water scarcity on these
communities could have significant consequences for regional stability.
Food and agriculture
In northern Europe, climate change and increased atmospheric CO2 concentrations
could have a beneficial impact on agriculture as a result of longer growing seasons
and increased plant productivity. New cropping opportunities may result as the
agricultural belt shifts northwards, and yield increases in commercial forests are
expected. However, any benefits arising from these changes may be offset over
the longer term by the northward shift in pests and diseases, increasing the need
for pesticide usage, as well as the rising threat of flooding. In southern and eastern
Europe, the impacts are likely to be negative. Water scarcity may lead to reduced
soil moisture content, soil compaction and cracking, and may make irrigation more
difficult. Heat stress will affect crop yields and livestock activities. Overall, fewer
cropping opportunities are expected in southern Europe and forestry yields are
expected to decrease (EEA, 2005; ECCP, 2007).
In China, climate change will also lead to changes in the distribution and structure
of agricultural production, leading to greater fluctuations in output. Higher
temperatures and fewer frost days may lengthen the growing season in northern
China but, as in the EU, it is thought that these benefits will be offset by increased
water scarcity and greater prevalence of pests and diseases (Lin and Zhou, 2006).
Predictions suggest that, if no measures are taken, the overall productivity of the
Chinese farming industry may decline by 5–10% by 2030. By 2050 the production
of major crops such as wheat, rice and corn may fall as much as 37% (MOST et
al., 2006). The consequences of this threat to food security for the world’s most
populous country should not be underestimated. Meanwhile the geographical
distribution of the major forest types will shift and the distribution range for
afforestation is likely to shrink (NDRC, 2007). This may have consequences for
China’s large-scale replanting programme – plantations play an important role in
protecting watersheds from flooding and preventing desertification. On the plus
side, the productivity of primary forests may increase by between 1% and 10%,
depending on the forest type (MOST et al., 2006).
Coastal regions
Climate change is likely to have significant impacts on coastal zones, particularly
through sea-level rise and extreme weather events. Direct impacts include
inundation, coastal erosion, flooding, increased salinity in estuaries and coastal
aquifers and impeded drainage. Ecosystems, infrastructure, settlements, tourism
and human health are all at risk.
One-third of the European Union population is thought to live within 50km of the
coast, with the proportion is as high as 100% in Denmark and 75% in the UK. It is
estimated that 9% of all European coastal zones lies below an elevation of 5m and
is potentially vulnerable to sea level rise. The Netherlands and Belgium will feel the
full force of the coastal onslaught, although other countries such as Denmark,
Germany, the UK and Italy, among others, may also be affected. Coastal
ecosystems will be threatened, especially in the Baltic, Black Sea and
Mediterranean. Sea-water temperature increase and sea-level rise will result in
changes in marine biodiversity, and the Mediterranean and Baltic coasts will
experience considerable loss of wetlands (EEA, 2005).
In China, coastal areas are also likely to be affected by climate change and sealevel rise. By 2030, the sea may have risen by 0.01–0.16m, leading to a higher
incidence of flooding and more severe impacts from storm tides. Extreme weather
events, such as storm tides and floods, can lead to major disasters and large
losses of life in China – in 2007 alone 652 people are thought to have died from
floods, landslides and mudslides in southern China, claiming the homes of a further
452,000 (Guardian, 2007). The Yellow, Yangtze and Pearl River deltas are
considered the most vulnerable regions because they contain large, dense
populations (MOST et al., 2006).
Ecosystems and biodiversity
Many plant and animal species are unlikely to survive climate change. An article
published in the science journal Nature suggests that, based on a sample of 1,103
land plants and animals, 15–37% of the species investigated will eventually
become extinct as a result of climate changes expected by 2050 (Thomas et al.,
2004). According to the EEA, observed temperature rise and changes in
precipitation are already affecting Europe’s ecosystems. The most vulnerable
regions are the Arctic and mountains as well as the coastal wetlands and
ecosystems of the Mediterranean. The impact of rising temperatures on snow
cover, glaciers and permafrost could adversely affect winter tourism and give rise
to more frequent natural disasters such as landslides, as well as species loss
(EEA, 2005).
In China, there is likely to be an increase in desertification of semi-arid areas.
Regional warming and drying will lead to reductions in wetlands. Large areas of
swamp will become meadow wetland. The spatial distribution of frozen soil on the
Tibetan Plateau will decrease, with the areas of surface frozen soil predicted to fall
by 10–15% over the next 50 years. Climate change will also lead to the shrinkage
of inland lakes – although those that rely on glacial melting may expand first before
disappearing (MOST et al., 2006).
In both regions, the impacts of climate change on ecosystems and biodiversity will
contribute to the undermining of the natural systems upon which human civilization
depends. The valuable services that these ecosystems provide, including water
purification, protection from flooding and access to medicinal products, will be
costly and difficult to replace.
3. Assessing vulnerability and identifying adaptation measures
The combined impact of all this change, on top of existing human-induced
pressures on the natural environment, is that some regions of China and Europe
will become more vulnerable as access to environmental resources comes under
threat. Through integrated assessment it is possible to identify how the physical
impacts of climate change will interact with socio-economic factors in order to
determine where the vulnerable regions are likely to be located. This can help
governments to improve regional adaptive capacity so that socio-economic and
political systems are better equipped to cope with the physical changes, and in
doing so, reduce the threat of conflict over access to vital resources and distress
migration.
Vulnerable areas identified in the European impact assessments and highlighted in
the 2007 Commission Green Paper include the south European and Mediterranean
basin (owing to water scarcity); mountainous areas (particularly the Alps); coastal
zones because of sea-level rise and storm surges; densely populated flood plains;
Scandinavia (where there will be increased precipitation falling as rain instead of
snow); and the Arctic region, where temperature increases will be highest.
In China, most regions highlighted in the 2006 impact assessment will experience
increased vulnerability of some form: northern China owing to the degradation of
agricultural zones; northwest China because of water shortages; eastern China
because of flooding; southwestern China owing to increased natural hazards in the
mountains; and the south because of sea-level rise. Further integrated analysis is
required to identify vulnerable areas with greater precision.
China in particular faces considerable challenges in translating existing knowledge
of the projected impacts of climate change and information about vulnerable areas
into specific adaptation measures. According to environmental economist Ji Zou
(2005), knowledge in China about adaptation resides almost entirely within the
academic community and much work still needs to be done by decision-makers to
develop and implement strategies and action plans for adaptation. China’s first
provincial-level adaptation strategy is now under development in the province of
Ningxia, involving international collaboration between the UK and China and the
engagement of eighteen partner organizations (DEFRA et al., 2007).
Figure 1: Progress in China in developing and implementing strategies and action
plans for adaptation to climate change
Assess effectiveness, and
benefits of the candidate
options
Assess costs of the
candidate options
Assess damage, risk,
and vulnerability in
both physical and
socioeconomic terms
Conduct CBA/CEA
and identify options with
largest net-benefit (CBA)
or least cost (CEA)
A
A
A
A
A
some → less → nothing
Develop and implement strategies and
action plans for adaptation to CC
Source: Zou and Wang, 2005.
According to Klein et al. (2005), adaptation can either be proactive or reactive and
the form of response can take place within natural systems (e.g. adjusting to
changes in the growing season) or within human systems. Responses within the
human system can be motivated by either public or private interests and they can
In decision-
A
Set up goals/targets for
adaptation and select
measures incl. technologies
making stage
Identify candidate
options of measures
to adapt to impacts
of climate change,
including D&T&T
In academic research stage
In academic research stage
Degree
In China:
Assess physical
impacts of climate
change on specific
sectors and
stakeholders
be planned (as a result of a collective action decision) or autonomous (individual
actors taking rational, self-interested decisions). (See Figure 2.)
Figure 2: Matrix showing the five prevalent types of adaptation to climate change
Anticipatory
-Changes in length of growing
season;
- Changes in ecosystem
composition;
- Wetland migration
Natural
Systems
Private
Human
Systems
Reactive
Public
- Purchase of insurance;
- Construction of house on
stilts;
- Redesign of oil-rigs.
- Changes in farm practices;
- Changes in insurance
premiums;
- Purchase of air-conditions
- Early-warning systems;
- New building codes, design
standards;
- Incentives for relocation.
- Compensatory payments,
subsidies;
- Enforcement of building
codes;
- Beach nourishment.
Source: Klein et al., 2005.
To improve resilience, it is necessary for decision-makers to anticipate the impacts
and encourage decisions that improve the region’s ability to cope, such as the
development of early warning systems. Decision-makers also need to discourage
autonomous, reactive decisions which may further contribute to the problem of
climate change. So, for example, there is a danger that, in response to higher
temperatures, individuals will purchase air-conditioning which will contribute to
further warming. Decision-makers can proactively prevent such measures by, for
example, setting standards in the building sector to improve energy efficiency for
heating and cooling.
4. Opportunities for collaboration
Given that China and the EU will confront similar challenges over the coming
decades, there exists an opportunity for the two to form an alliance and work
together to find ways to improve their resilience to climate change. Specific actions
that could be taken in pursuit of this goal are outlined below.
Expand the knowledge base (research and development)
A critical first step in developing an effective response strategy is to improve
access to evaluation and monitoring tools to assist with research on impacts and
adaptation. These issues were discussed at a joint workshop on vulnerability and
adaptation held in Beijing in 2006 as part of the EU–China partnership on climate
change established at the 2005 EU–China Summit. Topics covered included the
assessment of current impacts and the modelling of future ones in specific sectors
as well as strategies for adapting to climate change that are being developed and
implemented in both the EU and China.
Building on this work, and that of the China–UK Working Group on Climate Change
established in September 2006, a more detailed collaboration between the EU and
China could now take place to capture the full benefits of the monitoring and
evaluation tools that have been developed globally. These include high-resolution
general circulation models that provide information on climate scenarios. These
can help decision-makers identify and quantify the potential impacts of climate
change (IISD, 2005). Other tools are available to assess and manage climaterelated disasters, identify vulnerability on the ground, and help decision-makers
design and screen development projects for climate impacts – a process known as
‘climate- proofing’. Work has been undertaken by the International Institute for
Sustainable Development, the World Bank, the Institute of Development Studies
and the United Nations Framework Convention on Climate Change (UNFCCC),
among others, to disseminate the latest information on available climate adaptation
tools (IISD et al., 2007). This is in recognition of the important role that these tools
play in engaging adaptation efforts and the need to connect top-down information
on climate scenarios with bottom-up vulnerability assessments. Working at the
regional level through the EU–China partnership provides the opportunity to
mobilize and share these resources.
Recommendation for the Chinese and EU governments:
Improve access to monitoring and adaptation tools through official-level
exchanges and the establishment of an internet-based learning/information
platform.
Enhance adaptation planning
Enhancing adaptation planning requires undertaking research on impacts,
vulnerability and adaptive capacity (as defined in Annex I) and then connecting this
analysis with technological and policy options.
But such analysis can only be
useful if there is high-level agreement to integrate climate change adaptation into
the policy process in the first place.
There is evidence that the political will to incorporate adaptation into the decisionmaking process does exist, in both China and the EU. For example, the European
Commission, in its 2007 Green Paper on Climate Change and Adaptation, has
pinpointed European policies where climate change needs to be fully incorporated,
ranging from the Common Agricultural Policy and the Water Framework Directive
to the Sustainable Consumption and Production Plan and the Common Foreign
and Security Policy. China, in its National Climate Change Programme, has
identified areas where climate change can be incorporated into other policy areas
such as the Agriculture Law, Forest Law and the Marine Environment Protection
Law.
There is therefore scope for China and the EU to collaborate in the area of
integrated assessment and analysis, with the aim of sending a strong political
signal of the need to incorporate adaptation early into the decision-making process.
To be effective, this political signal must be backed up by analysis which identifies
the linkages between the impacts of climate change and the technical and policy
solutions. This requires the establishment of a multi-disciplinary centre to bring
together experts from science, social science, technology and policy fields in order
to connect integrated research with solutions.
Recommendations for the Chinese and EU governments:
Create political consensus on the need to incorporate climate change
adaptation early into European and Chinese policy process; and
Establish a multidisciplinary EU–China centre for adaptation to provide analysis
that connects the emerging scientific /technical research with policy options.
Improve technology cooperation and investment
The Chinese government has undertaken several technology needs assessments.
These are summarized in the Chinese Initial National Communication, published in
2004 (full details are included in Annex II to this paper). According to Klein et al.
(2005), a successful adaptation strategy typically combines hard technologies such
as drought-resistant seeds, seawalls and irrigation technology with soft
technologies such as insurance schemes and crop rotation patterns. They argue
that most communities have local-level technologies for adaptation that can be of
value.
Despite the argument that many of technologies already exist at national level
(UNFCCC, 2006a), there is evidence that the Chinese are experiencing difficulty in
accessing the technology that they need for monitoring and evaluating climate
change and adapting to the impacts (UNFCCC, 2006b). Indeed, economic and
market barriers are frequently cited as one the major hurdles to technology transfer
by developing countries, with lack of financial resources, high investment costs,
incompatible prices, subsidies and tariffs and lack of incentives identified as
problems (see Figure 3).
Figure 3: Economic and market barriers to technology transfer, cited by developing
countries in their technology needs assessments
10
8
6
4
Source: UNFCCC, 2006b.
According to the OECD (2002), measures to facilitate technology investments in
developing countries include:
-
Foreign direct investment (FDI) – this is considered the most important
means of transferring technology to developing countries because it
includes an entire package of management experience that can be
transferred by the multinational company, through methods such as
training programmes and learning by doing;
IPR issues
Dominant interests of
large energy producers
High transaction costs
High borrowing costs
Lack of competition
Lack of acces to credit
High upfront costs
lack of markets
Consumers low income
Lack of incentive
Incompatible prices
High investment costs
Lack of financial
resources
0
High costs vis-à-vis
traditional technology
2
Weak currency
Number of Barriers
12
-
Joint ventures – this is a common business arrangement where firms in
different countries agree to mutually beneficial transfers of technology and
information. In the case of adaptation technologies in China, this will
require the involvement of local firms who will work with the technology on
the ground;
-
Licences – firms may license their technology to a local firm to enable it to
upgrade its technology;
-
Temporary relocation of employees – technological know-how can be
transferred internationally by employees;
-
International development aid – This involves national development
programmes to facilitate the transfer of adaptation technologies.
Liberalizing trade in environmental goods and services is a second way to improve
access to technologies by removing tariff and non-tariff barriers. Environmental
goods and services are on the agenda of the Doha round of WTO negotiations.
However the discussions over environmental goods and services have become
bogged down over definitional issues. China and the EU could find a way round
this impasse by developing a bilateral or plurilateral agreement (possibly involving
Japan) with the aim of immediately eliminating tariffs and non-tariff barriers on
monitoring, evaluation and assessment equipment and adaptation technologies.
Recommendations for the Chinese and EU governments:
Negotiate a bilateral or plurilateral agreement (involving Japan) to remove tariff
and non-tariff barriers on monitoring, evaluation and assessment equipment
and adaptation technologies.
Set up an active Chinese Trade and Investment Office in Brussels and
European equivalent in Beijing. These offices could be tasked to undertake an
assessment of EU and Chinese FDI frameworks respectively, with specific
focus on adaptation technologies, to further clarify the barriers to trade that
need to be overcome, and to identify opportunities for improving FDI and joint
ventures between the two regions.
Establish joint standards
Anticipatory measures can be taken by China and the EU to establish standards
that will improve community capacity to cope with impacts of climate change and to
avert actions (such as the purchase of air-conditioning) that will contribute to further
warming. These could focus on the building sector and product design to improve
energy efficiency.
Within the European Union two directives are particularly relevant – the Directive
on Energy Performance in Buildings and the Ecodesign Directive. In the 2007
Green Paper on climate change and adaptation, the Commission undertook to
revise the Directive on Energy Performance of Buildings and develop a Strategic
Energy Technology Plan to ‘match the double challenge of climate change
mitigation and adaptation’ (EEA, 2005).
The EU Ecodesign Directive, which is due to be implemented in August 2007, aims
to reduce energy consumption from household electrical appliances, including
heating, ventilation and air-conditioning. This directive makes no direct provision for
mandatory requirements for specific products, which will be negotiated over the
next two years following consultation and an impact assessment. The provisions on
room air-conditioning will be negotiated in the latter part of 2007 and 2008 and
adopted in 2009 (European Commission, 2007b).
China too, in its 2007 National Climate Change Programme, has highlighted the
need to ‘improve existing energy-saving regulations and standards’ (NDRC, 2007).
The laws cited include the Energy Conservation Law and Building Energy-Saving
Management Regulation. Given the desire to review all these regulations in both
regions, this is a timely opportunity to establish joint standards in building efficiency
and product design and incorporate them into legislation.
Recommendation for the Chinese and EU governments:
Develop joint standards for energy efficiency in the building sector and product
design (particularly heating, ventilation and air-conditioning), which would be
followed up by detailed technical analysis by officials in 2008.
Mobilize financial resources
The international community established three funds under the UNFCCC and
Kyoto Protocol, designed to meet the adaptation requirements of developing
countries – the Special Climate Change Fund, the Adaptation Fund and the Least
Developed Countries Fund. However, these funds will be insufficient to finance the
necessary adaptation measures needed in order to respond effectively to climate
change.
There is therefore a need to obtain funding from sources outside the UNFCCC,
through the international financial institutions (IFIs), government development
assistance and the private sector. The difficulty with this is that adaptation
initiatives are closely connected to other aspects of development and it can be
difficult to disentangle the adaptation component from the rest of the project. This
problem is aggravated still further when adaptation is ‘mainstreamed’ into
development planning. According to Huq and Reid (2004), ‘bringing adaptation to
the centre of decision-making and programming makes it even more challenging to
separate financial flows that are “new and additional” from non-climate change
ODA activities’.
The EU and China therefore need to develop a systematic
methodology for climate-proofing development projects from IFIs, bilateral and
private sources of funding. This further emphasizes the need for improved access
to the adaptation policy tools mentioned above.
Improve access to insurance
Discussions have been taking place for a number of years within the UNFCCC on
ways to improve access to insurance in developing countries. Article 4.8 of the
Convention calls upon Parties to consider actions, including those related to
insurance, to meet the specific needs and concerns of developing countries with
respect to both the adverse impacts of climate change and the impact of the
implementation of response measures. Article 3.14 of the Kyoto Protocol calls for
the implementation of Articles 4.8 and 4.9 of the UNFCCC in fulfilling obligations of
the Kyoto Protocol, and explicitly calls for the consideration of the establishment of
insurance. The EU and China also need to look into the issue of insurance outside
the international negotiations, to ensure that access to predictable funds is
available for disaster relief.
Globally, insurers are increasingly claiming that governments are not doing enough
to prepare for natural disasters linked to climate change. They have called for
governments to shoulder more responsibility rather than relying on the insurance
sector by, for example, implementing building codes, preventing residential
developments in flood plains and other high-risk areas, developing stronger storm
run-off systems and cleaning out forest waste to avoid the spread of fires
(Insurance Times, 2007). But even if governments take measures to reduce the
risks, natural disasters will still occur. Climate change will increase the potential for
large-scale flooding and drought to cause big economic losses. Until recently
insurers have been prepared to accept this increased risk. But climate models are
becoming ever more precise, enabling insurers to pinpoint the regions at threat
with greater accuracy. Factor in higher levels of competition in the industry and it is
easy to see why insurers are becoming more discerning about the properties that
they are prepared to underwrite. There is a danger that insurers might decide to
withdraw their products from households located in risky areas, or charge a
premium that is above the ability of home-owners to pay.
There is even a danger that if governments decide to prevent new residential
developments in areas such as flood plains, such ‘uninsurability’ will lower the cost
of this land, making it more likely to be occupied by the poorer, marginalized
members of society who cannot afford to live in the safe areas. As a result the most
vulnerable communities that are least able to respond (by relocating) are likely to
be most exposed to extreme weather events or sea-level rise. To find a way out of
this quandary it is necessary for European and Chinese governments to work with
investors and insurers to discuss insurance products that can be made available
for these most vulnerable communities. Some options for developing countries
have been identified by the International Institute for Sustainable Development in
response to the fact that formal insurance schemes play a limited role in protecting
individuals (IISD, 2005). These include:
International Insurance Pool: A collective loss-sharing fund to compensate victims
of sea-level rise.
Public-private Insurance Partnerships: Schemes where the insurer is the
government, but policies are developed and managed by the insurance sector and,
where required, joint mutually beneficial activities are undertaken.
Regional Catastrophic Insurance Schemes: Regional cash reserves are pooled
through mandatory contributions from governments. These reserves are lent to
members in the event of extreme events.
Micro-insurance: These use risk-pooling to provide compensation to low-income
individuals or groups adversely affected by a specified risk or event.
In addition, financial institutions are developing ‘alternative risk transfer initiatives’
to reduce exposure to climate impacts, including bonds, derivatives and hedge
funds to protect against extreme weather events.
Recommendation for the Chinese and EU governments:
Establish a high-level group of investors and insurers to work with the European
and Chinese governments in order to explore which financial products and
services can be developed for vulnerable communities.
Build capacity and exchange information
The Chinese National Communication (PRC, 2004) outlines the areas where
capacity-building can assist with adaptation efforts, as follows:
-
Guidelines for the development of adaptation projects;
-
Adaptation technology needs assessment and technology transfer;
-
Case studies on extreme climate events and research report compilation
and dissemination;
-
Capacity-building in ocean and water resource departments;
-
Capacity-building in climate observation systems;
-
Identification and enhancement of traditional knowledge, skills and
practical experiences in adaptation.
Many of these measures have already been touched upon in the recommendations
for collaboration mentioned above, but there is scope for greater sharing of existing
information between China and Europe to help communities adjust to their
changing natural environment. This might include sharing knowledge on stressresistant crops, on controlling pests and disease or on preventing desertification. It
might involve passing on information about integrated water resource allocation
and optimising water allocation, introducing anti-flood measures or guaranteeing
safe drinking water. It may involve working collectively to improve early-warning
and emergency response measures to manage climate-related disasters.
Measures can be taken up by the EU and China to improve access to training and
exchange information in order to build capacity.
Recommendation for the Chinese and EU governments:
Undertake joint training, international exchanges, public awareness and
information-sharing initiatives between the EU and Chinese research and
policy-making communities through universities and government departments.
5. What happens if we fail to respond quickly enough?
The Stern Review on the economics of climate change concludes that market
forces alone are unlikely to lead to efficient adaptation, owing to uncertainty in the
climate projections and lack of financial resources. Policy measures need to be put
in place to encourage cost-effective adaptation. The Stern Review advocates early
action by anticipating potential damage, minimizing threats and providing
competitive advantages for companies leading in adaptation strategies and
technologies (Stern, 2006).
As an illustration of this, the Joint Research Council ‘PESETA’ study, which
assesses the economic impacts of climate change in the EU, demonstrates the
impacts of adaptation measures on the level of damage due to sea-level rise (see
Figure 4) (JRC, 2007). This shows that damage caused by sea-level rise without
adaptation can be up to four times higher than the likely costs if additional flood
defences are built. Without action, the costs increase steeply from the 2020s to the
2080s.
Figure 4: Impacts of adaptation measures on damage due to sea-level rise – costs
billion euro per year
with and without adaptation measures
20
18
16
14
12
10
8
6
4
2
0
2080s
2080s
2020s
2020s
2020s
Without
With
2020s
2080s
without
with
without
sea level rise of 25.3 cm
Total residual damage costs
with
2080s
without
with
sea level rise of 56.4cm
Adaptation Costs
Source: JRC, 2007
According to the European Commission (2007), ‘If there is no early policy
response, the EU and its Member States may be forced into reactive unplanned
adaptation, often abruptly as a response to increasingly frequent crises and
disasters, which will prove much more costly and also threaten Europe’s social and
economic systems and its security.’ (European Commission, 2007a)
Given that China appears to be at least as vulnerable to climate change impacts as
the European Union, it seems reasonable to conclude that the costs of adaptation
measures are likely to rise sharply in China as well if early action is not taken.
6. Conclusion
Analysis of four sectors in China and the EU – water, food and agriculture, coastal
regions, and ecosystems and biodiversity – demonstrates that both regions will
face similar challenges as a result of climate change, including drought, flooding,
shifting agricultural zones and productivity, sea-level rise and disturbance to natural
ecosystems and biodiversity loss. Taking into consideration that the EU and China
will be facing these impacts together, we can expect to experience increased
vulnerability across both regions. Our ability to cope will depend on our adaptive
capacity, which in turn is influenced by socio-economic and political factors.
Given this shared set of challenges, China and the EU now face a choice –
whether to collaborate and face up to these challenges together or to take separate
paths and wait to see what the consequences will be. The longer the delay in
taking action, the more expensive it is likely to be.
This paper has outlined six areas where China and the EU can work together to:
•
expand our understanding of the impacts and vulnerability;
•
enhance adaptation planning;
•
improve technology cooperation and investment;
•
establish joint standards;
•
improve access to insurance; and
•
build capacity and exchange information.
In summary, specific recommendations for Ministers to consider at the November
2007 EU–China Summit are:
-
Improve access to monitoring and adaptation tools through official-level
exchanges and the establishment of an internet-based learning/information
platform;
-
Create political consensus on the need to incorporate climate change
adaptation early into European and Chinese policy processes;
-
Establish a multi-disciplinary EU–China centre for adaptation to provide
analysis that connects the emerging scientific/technical research with
policy options;
-
Negotiate a bilateral or plurilateral agreement (involving Japan) to remove
tariff and non-tariff barriers on monitoring, evaluation and assessment
equipment and adaptation technologies;
-
Set up an active Chinese Trade and Investment Office in Brussels and
European equivalent in Beijing. These offices could be tasked to undertake
an assessment of EU and Chinese FDI frameworks respectively, with
specific focus on adaptation technologies, to further clarify the barriers to
trade that need to be overcome, and to identify opportunities for improving
FDI and joint ventures between the two regions;
-
Develop joint standards for energy efficiency in the building sector and
product design (particularly heating, ventilation and air-conditioning), which
would be followed up by detailed technical analysis by officials in 2008;
-
Establish a high-level group of investors and insurers holders to work with
the European and Chinese governments in order to develop financial
products and services targeted towards vulnerable communities;
-
Undertake joint training, international exchanges, public awareness and
information sharing initiatives between the EU and Chinese research and
policy-making
departments.
communities
through
universities
and
government
Annex I – Definition of terms 1
Adaptation – Adjustment in natural or human systems in response to actual or
expected climatic stimuli or their effects, which moderates harm or exploits
beneficial opportunities. Various types of adaptation can be distinguished, including
anticipatory and reactive adaptation, private and public adaptation, and
autonomous and planned adaptation.
Adaptive capacity – The ability of a system to adjust to climate change (including
climate variability and extremes), to moderate potential damage, to take advantage
of opportunities or to cope with the consequences.
Vulnerability – The degree to which a system is susceptible to, or unable to cope
with, adverse effects of climate change, including variability and extremes.
Vulnerability is a function of the character, magnitude and rate of climate change
and variation to which a system is exposed, its sensitivity and its adaptive capacity.
Technology – A piece of equipment, a technique, practical knowledge or skills for
performing a particular activity.
•
Environmentally sound technologies – Technologies that protect the
environment, are less polluting, use resources in a more sustainable
manner, recycle more of their wastes and products, and handle residual
wastes in a more acceptable manner than the technologies for which they
were substitutes, and are compatible with nationally determined socioeconomic, cultural and environmental priorities. The term includes hard
and soft technologies.
•
Technology transfer –The broad set of processes covering the exchange of
knowledge, money and goods among different stakeholders that lead to
the spread of technology for adapting to or mitigating climate change. The
word
‘transfer’
encompasses
both
cooperation across and within countries.
diffusion
of
technologies
and
Annex II – Technology needs for adaptation to climate change in
China
Everyday Water
Resources
Agriculture
Natural ecology
and forestry
Sea level and
coastal zone
Desertification and
natural disasters
Other
Capacity-building on methods and rules for regional water
resource management
High-efficiency water-saving agro-technology for spray and drip
irrigation
Technology for economizing on and reusing industrial water
resources
Water-saving
technology
and
water-saving
appliances
transformation
Technology for the treatment, recycling and reuse of industry and
daily-life wastewater
High-efficiency flood-control technology
Water and soil preservation technology
Technology for observation and pre-warning of floods and
droughts
Technology for deep and intensive processing of agro-products
Technology for observation and pre-warning of agriculture
calamity
Capability for research and development of agro-biological
technology
Agricultural seedling technology
Capability for research and development for innovative fertilizer
and prevention and destruction of agricultural pests
Technological support for the prevention and treatment of salinity
and alkalinity and water-soil erosion
Technology improving water-use efficiency in agriculture
Modern agro-technology on basis of automation and intelligence
Technology support for eco-protection of forestry and grassland
Capability for research and development of technology for the
prevention and treatment of forest and grassland pests
Public welfare eco-forest, speedy and lush growth forest, forest for
high-efficiency coke and charcoal, and afforestation technology
Education and training for forestry and grassland management
Support and training for the protection of eco-system of
marshland, mangroves and coral reefs etc
Technology for observation, pre-warning and forecast of sea-level
rise and coastal and marine eco-environment
High-standard dyke and embankment construction technology
Research on the impact of global climate change on China’s
marine eco-environment
Technology for the recovery and reconstruction of marshland,
mangrove and coral reefs
Technological support for the prevention and treatment of
desertification
Technology for observation and pre-warning of natural disasters
Protection of bio-diversity, construction and preservation of nature
reserves, protection of marshland, prevention of and recovery from
soil deterioration and other relevant technologies
Source: adapted from UNFCCC, 2004, Initial National Communication
Technology needs for climate and systematic observation in China
Atmospheric
observation
Marine
Observation
Terrestrial ecoobservation
Meteorological,
marine and
terrestrial resource
satellites
Data management
Monitoring and
detecting of
climate change
Calculation
capacity
Personnel training
Density increase and improvement of network stations, including
technologies and equipment for observation of the earth-surface,
boundary between land and atmosphere, water-heat flux exchange,
radiation exchange, partitioned observation of atmospheric energy
balance, etc.
Technology and equipment support for observation and analysis for
global and regional atmospheric background and composition
Equipment and technological support for selected key meteorological
stations for observation of atmospheric chemical composition
Technology and equipment support for density-increase construction of
observation spots in typical and climate sensitive areas in west China
(including exploration by robot plane)
Equipment and technology for oceanic observation, radiation parameter,
land and oceanic atmosphere boundary related flux and exchange
Technology and equipment for monitoring water and carbon circulation
on land
Equipment and technology for monitoring and observation of typical
ecosystems such as agricultural land, forest, grassland, wetland, lake,
waste desert and urban areas.
Equipment and technology for observation of changes in soil, vegetation
and land use
Technology and equipment for high spectrum revolving power and highprecision effective load
Technology for satellite data acquirements and remote-sensing
information collection and reviewing
Technology and equipment for quality control, collection, collation,
storage and distribution of climate information
Technology and equipment for substitute data collection and technology
and equipment for extreme weather/climatic events monitoring and prewarning
Climate forecasting technology covering multi-strata (atmosphere-landocean) coupling, life-cycle processes and human activity influences
Technology for integrating analysis and assessment modelling of
influence of climate change
High-performance calculation technology and equipment
New equipment operation, data analysis and personnel capacity
building
Source: adapted from UNFCCC, 2004, Initial National Communication
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