Climate Change Adaptation Measures Are Economically Justifiable even under No Climate Change: Evidence from the South-Moravian Region ^†

Abstract

Climate change has a strong influence on agriculture and will continue to do so in the years to come. As a result, significant social costs are generated. These effects may be eliminated by implementing various types of adaptation measures. However, the measures are also associated with costs and it is necessary to evaluate whether generated benefits and prevented climate change costs outweigh them. This contribution studies economic impacts of climate change in agriculture in the South Moravian region in a period of 2017–2040. Four scenarios are analysed based on combinations of the following states of a world (i) climate change worsens the current situation or there is no change; (ii) adaptation measures are implemented or the status quo is maintained. The scenarios are modelled based on an anthropocentric approach using a modified cost-benefit analysis and the concept of ecosystem services. The economic analysis covers investment costs, operating costs, loss of profits due to decreasing production and other costs. The benefits side consists mainly of regulation services prevented loss (thanks to lower soil erosion or better water retention), improved air quality as well as external benefits such as higher biodiversity. Based on measures effectiveness and costs, expected net present social benefits were calculated for each of the scenarios. The results showed that implementing the measures is always profitable regardless of climate change. Under no shift in climate change the estimated social loss until 2040 is 6.6 billion CZK with no measures implemented. If the situation regarding climate change becomes more serious, the net loss rises to 9.5 billion CZK. However, the implementation of adaptation measures leads to positive outcomes and is associated with net social benefits of 2.1 billion CZK if it is necessary to battle climate change and to barely positive outcome when climate change does not accelerate. The analysis confirms that implementation of adaptation measures is profitable either way (especially if climate change becomes more serious) and can serve as an argument in political decision-making as these measures appear to maintain sustainability of agricultural land use.