What climate change costs

Occurred

What has already been paid

All figures from the project “Kosten durch Klimawandelfolgen in Deutschland” by IÖW, Prognos and GWS, commissioned by the German Federal Ministry for Economic Affairs and Climate Action.

• At least 70 billion euros from flood events since the year 2000. Floods are, according to the study, the costliest extreme weather events in Germany.
• At least 40.5 billion euros for the floods on the Ahr and Erft in July 2021 alone, of which 33.4 billion direct and 7.1 billion indirect damages. The study calls it the most damaging extreme event in German history.
• Around 35 billion euros for the drought and heat summers of 2018 and 2019 together. Agriculture, forestry, industry and trade were affected above all.
• At least 30,000 additional deaths from extreme weather since 2000. 99 percent of them are attributable to heat events.

These figures are not added up here. The 70 billion concern floods, the 35 billion heat and drought; they come from separate sub-studies of different hazard types, and the study does not say whether they overlap. A total would be our own calculation, not theirs.

Which part of this is climate change

A flood costs a certain amount, but that amount is not “climate change”. Attribution works differently, and the study demonstrates how. On the 2021 Ahr valley flood it states that climate change increased “the probability of occurrence by a factor of 1.2 to 9 and the amount of precipitation by up to 19 percent”.

That is the form in which attribution research makes statements: probability and intensity. It does not say which share of a damage figure in euros is due to climate change, and neither do we.

Scenario

What Germany may be facing

For the future, the study runs three climate pathways through a macroeconomic model: weak, medium and strong climate change. Result for the period 2022 to 2050, cumulative: 280 to 900 billion euros. For the year 2050 this corresponds to a loss of 0.6 to 1.8 percent of gross domestic product.

This is measured as the cumulative change in real gross domestic product against a reference run without advancing climate change. It is therefore a difference between two model runs, not an invoice. The study names no price base year for it, and needs none.

The study itself writes: “The results do not constitute forecasts or exact predictions, but are intended to convey an impression of the possible future economic consequences of climate change.”

What adaptation changes about it

The same calculation with adaptation measures produces considerably lower figures. It is the first quantified evidence on this page that adaptation works. It comes with two limitations, both of them from the study itself.

• Adaptation does not remove the damages. The study writes that it does “not lead to no more damages from climate change occurring, but that these can only be reduced”. The fact that the weak pathway shows a plus arithmetically is because the investments themselves stimulate the economy and outweigh the remaining damages. Not because none would arise.
• The uncertainty is larger here than elsewhere. The study calls the results “subject to high uncertainties” and states that “an exact cost-benefit analysis is not possible in advance”. Adaptation investments have to be made without knowing how severe climate change will turn out to be.

What none of these figures contain

The study expressly describes its results as a lower bound. The reason is not carelessness but the limit of the method: an economic model can only represent what can be expressed in money. Not included, among others:

• ·Deaths. The 30,000 additional deaths above appear in the retrospective part; they are not contained in the scenario costs. They must therefore not be added to them.
• ·Loss of quality of life and the loss of cultural assets.
• ·Loss of biodiversity through the extinction of animal and plant species.
• ·Entire fields of action: fisheries, coastal and marine protection, water management and ecosystem services could not be represented.
• ·For heat and drought there are no comprehensive surveys of the kind that exist for storms and floods via insurance data.

Loss of biodiversity is absent here for the same reason it never appears as a tonnage figure in this site's lever catalogue: it cannot be brought into the same unit without inventing something. The study draws the same line.

What the model cannot do

The technical report criticises its own method, and that belongs here. It names three points itself:

• Linearity. The model framework extrapolates the economy's past behaviour. That suits gradual changes such as rising temperatures, but leads to “problems in implementing shock-like extreme events”: the model structure lets the economy return to its original path after a shock.
• Regional resolution. Some consequences and adaptation measures act regionally, dyke building on the coast for instance. The model calculates nationally.
• Global effects. Climate change also causes damages outside Germany that feed back through trade relations. A national model framework does not capture that fully.

For context, since the question suggests itself: we looked for a documented expert position holding such estimates to be too high, and found none of comparable weight. Criticism of macroeconomic damage models runs predominantly in the other direction. That is not a judgement, it is the state we found.

How this relates to electricity costs

The cost page carries, as its fourth level, the German Environment Agency's rate of around 200 euros per tonne of CO₂. That is a price per tonne for valuing emissions, and it is derived from damage estimates. The figures here are the other end of the same question: not what a tonne is worth, but what the consequences amount to in total.