15 April 2020
This research and the associated report was conducted by Dr David Newth, CSIRO Climate Science Centre, under the ESCC Hub Case Study 4.5: Framework for determining the net socio-economic benefits of Earth systems and climate change science and services.
Earth Systems and Climate Change Hub researchers have developed a conceptual cost-benefit framework to measure the economic value of the Hub’s research outputs to the Australian economy and society more generally. While it is difficult to obtain quantitative estimates of the benefits of ‘public good’ climate change services, in part due to their underpinning and cross-cutting nature, the Hub’s analysis suggests that investment in climate change science and services shows a net benefit of between US$34 billion and US$52 billion per year to the Australian economy by 2100 under a high emissions scenario.
What are climate change science services?
Meteorological services are generally characterised as ‘weather services’ (dealing with timescales of minutes to weeks), ‘climate services’ (months) and ‘climate change services’ (decades to centuries). The science and services of the Earth Systems and Climate Change Hub, for the most part, sit in the climate change services category. These services include the use of simple information like historical observed climate data sets as well as more complex products such as model-based predictions and projections of weather and climate variables for both mean conditions and extreme events. Additional outreach resources, such as guidance materials, management tools, training and technical support, are often included as well to develop user capacity.
When applied effectively, science-based services have the potential to enhance the productivity, efficiency, value and resilience of the Australian economy in a tangible way across multiple sectors.
Determining the return on investment of the science and services of the Earth Systems and Climate Change Hub
Hub researchers combined climate and economic modelling to develop a framework that can be used to analyse and assess GDP growth under different climate and investment scenarios. By comparing these scenarios with a reference case – where climate and climate services are not available/applied or otherwise have no impact on the economy – they could explore the costs and benefits of these services.
Two climate scenarios were considered: a high, ‘business as usual’ emissions scenario, where the climate evolves according to the RCP8.5 scenario; and a low, ‘best case’ emissions scenario, where the climate evolves according to the RCP3PD scenario.
Four climate services investment scenarios were considered, where the government invests and implements policies to varying degrees to improve climate services and in doing so, mitigates some climate impacts at national economy scale: an early-low investment scenario, where 0.05% of GDP per year is invested in climate services starting in 2020; an early-high scenario, where 0.1% of GDP is invested starting in 2020; a late-low scenario, where 0.05% of GDP is invested starting in 2050; and a late-high investment scenario, where 0.1% of GDP per year is invested in climate services starting in 2050.
What’s it worth?
Researchers calculated that the high emissions pathway results in a reduction in GDP of around 2% per year in 2100 from climate-related economic impacts, compared to the reference case. For the low emissions scenario, the reduction is 0.75% per year.
In the high emissions world, investment in climate services returns a net benefit to the national economy in 2100, with the high investment scenarios outperforming the low investment scenarios. The early-high investment scenario results in just over US$52 billion per year of benefits to the economy in 2100, after all costs and benefits are considered. The late-low investment scenario is the poorest, providing benefits to the economy of only US$34 billion per year in 2100.
What are the implications?
With governments and private businesses making climate-sensitive policy, planning and investment decisions to mitigate climate risk over multiple decades across all sectors of the economy, there is potential for these decisions (and socio-economic outcomes) to be improved by investment in and application of climate services.
Further gains are also possible if the quality and quantity of services are enhanced through investment in requisite scientific infrastructure, observational capability, knowledge based interpretative and decision support tools, guidance materials, user training and other capacity development, and the basic underlying research and development to inform and facilitate the application of climate services.
Read more: Case study summary report
For more information about the case study and the methodology used, contact:
Dr David Newth, CSIRO Climate Science Centre
Dr Geoff Gooley, ESCC Hub Program Manager