May 7, 2015
A paper by JICA Research Institute Research Fellow Daiju Narita incorporating new factors to estimate the economic value of future damages and impacts caused by climate change - "Environmental Tipping Points Significantly Affect the Cost-Benefit Assessment of Climate Policies" - was published in PNAS, Proceedings of the National Academy of Sciences of the United States of America. PNAS is a highly influential scientific journal ranking along with "Nature" and "Science," and it publishes cutting-edge research. The paper points out that the social cost of climate change may greatly exceed most current cost-benefit analyses of climate change, which may suggest more stringent climate policy in future discussions.
Amazon rainforest, "lungs" of the planet
Methodology used for estimating the economic cost of damages and impacts caused by climate change normally places the social cost of carbon emissions at around $40 per ton, as calculated by a joint working group of US government agencies. However, climate change has irreversible risk factors, such as forest dieback, in which once a situation occurs, it is not possible to return to the original condition. Moreover, the risk interacts with the limited substitutability of ecosystem services. In traditional estimates, there is an inadequate impact assessment of irreversible risk and limited substitutability. In this paper Narita conducted simulations that added these two extremely important factors into the cost-benefit analyses of climate change.
The results showed that, depending on the situation, the cost of carbon emissions could be several times greater than traditional estimates.
According to Narita, research incorporating irreversible risk factors in estimates of the cost of damages and impacts caused by climate change has been conducted in the past, but the significance of this paper is to deal with risk factors with limited substitutability. Narita said, "There is a need for further research as this could change people's understanding of the climate change problem in the future."
Currently at JICA-RI, Narita is engaged in researches in air pollution in Asian cities, in economic value of forests in Ethiopia, and in evaluation methods of JICA projects in terms of climate change adaptation. The paper published in PNAS is a compilation of the research Narita was conducting while at the Kiel Institute for the World Economy, Germany, before assuming his position at JICA-RI.