Projection of Economic impacts of climate change in Sectors of the European Union based on boTtom-up Analysis

The objective of the PESETA project (Projection of Economic impacts of climate change in Sectors of the European Union based on boTtom-up Analysis) is to make a multi-sectoral assessment of the impacts of climate change in Europe for the 2011-2040 and 2071-2100 time horizons.

The project benefits largely from past DG Research projects that have developed impact modelling capabilities (e.g. the DIVA model) and high-resolution climate scenarios for Europe (the PRUDENCE project).

The value-added from the PESETA project relies on the following issues:

Policy-relevant time horizon: 2020s, in addition to the 2080s.
Use of high-resolution scenario data.
Consistent climatic and socio-economic framework across sectoral assessments.
Use of state-of-the-art climate impact modelling tools.
Use of a common impact metric (monetary) to aid decision-making.

PESETA aims to contribute to a better understanding of the possible impacts of climate change in Europe, an extremely complex issue. In this respect, there are several limitations of the PESETA study (in part, due to the limited resources available for the study, both in terms of time and money) that should be considered when interpreting the results:

Cascade of uncertainty. Making a quantitative assessment of the impacts of climate change implies necessarily to deal with many sources of uncertainty, ranging e.g. from the future evolution of population to the monetary valuation of impacts. Each of them should ideally be considered in a probabilistic way. Such an exercise is, however, beyond the scope of the PESETA study and the current state-of-the-art.
Adaptation. The PESETA project is primarily an impact assessment as the quantitative treatment of adaptation is relatively simple in most of the sectors, while being absent in some of them (e.g. river floods).
Scope of the assessment. The scope of the PESETA assessment is relatively limited compared to the many expected impacts of climate change. In particular, while for some sectors the assessment is pan-European (e.g. human health, coastal zones), for others the evaluation is limited to specific geographical areas (e.g. for river floods). Moreover, possible inter-sectoral effects are not considered (such as the effects of water supply constraints on agriculture and tourism). Another limitation of the study comes from the fact that some relevant market impacts (e.g. forestry) and non-market impacts (e.g. ecosystems) are not considered. Finally, the effects of extremes are not taken into account, though they can be crucial in some sectors (e.g. heat waves in the Human health assessment).
Despite these limitations, the PESETA project provides a valuable indication of the economic costs of climate change in Europe based on physical impact assessment and state-of-art high-resolution climate scenarios.

Results:

Preliminary results of PESETA have been published in the Staff Working Paper accompanying the EC Communication on "Limiting Global Climate Change to 2 degrees Celsius. The way ahead for 2020 and beyond" (see DG Environment related Web site http://ec.europa.eu/environment/climat/future_action.htm).

The preliminary results for the Floods sectoral study are available at: Feyen L., Dankers R., Barredo J.I., Kalas M., Bódis K., de Roo A., and Lavalle C. "PESETA- Flood risk in Europe in a changing climate". EUR 22313 EN.