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Fiscal Implications of Climate Adaptation

Fiscal Implications of Climate Adaptation

11 May 2011
Washington, DC
United States

The first Dinner Dialogue in Washington, DC  focused on the theme of climate change adaptation was held on 11 May 2011 and hosted by the Ecologic Institute and the German Embassy in Washington DC as part of the German government’s Transatlantic Climate Bridge initiative.

A long-standing tradition at Ecologic Institute’s Berlin office, this was the first Dinner Dialogue in the US capital. The Dialogue featured Mr. Christian Egenhofer, Senior Fellow and Head of the Energy and Climate Program at the Center for European Policy Studies (CEPS) in Brussels. Participants represented governmental and non-governmental organizations from the regional, national and international level. Mr. Egenhofer presented initial findings from a first-of-its-kind CEPS study on the fiscal implications of climate change adaptation. Marlon Flores, Senior Policy Advisor at the Ecologic Institute, moderated a relaxed discussion of the topic.

Adaptation to the effects of climate change has become one of today’s most discussed challenges, however this discussion often excludes the fiscal consequences. In his lively dinner presentation, Mr. Egenhofer shed light on the magnitude of these fiscal effects, which will be severe for a number of countries - as they affect economic activities, land use, biodiversity, public health and water systems. For the first time in history, according to Mr Egenhofer, large parts of fiscal and regulatory policy will have to be aligned with environmental concerns on local, national and supranational levels.

His presentation centered on the main fiscal drivers behind direct and indirect costs, such as the degree of exposure to gradual and extreme climate events, the level of protection already in place in areas at risk, and the state’s liability for damages. He then provided various policy recommendations to mitigate the described fiscal impacts. Recommendations included the selection of the right level of protection using appropriate cost-benefit analysis tools, investing in research and development, the provision of public information, and limiting the state’s liability through public–private partnerships with the insurance industry.

A lively discussion followed Mr. Egenhofer’s presentation, covering issues such as: possible implications for the insurance of buildings close to the coast or rivers; the value of sustainable ecosystem management in climate adaptation; implications for foreign policy and grants to developing countries; as well as the possibility of a green jobs component in the field of adaptation. One of the main conclusions drawn from this discussion was that even though the study serves as an important piece to close the knowledge gap on climate change implications, the lack of information and empirical data is still a significant barrier to advance informed decision-making in the field of climate change. Looking ahead, it will be exciting to follow how the results of this study are disseminated and discussed in Germany, the EU and potentially in the US.

Further links

Christian Egenhofer
11 May 2011
Washington, DC, United States