Measuring market and non market costs of Climate Change and benefits of climate actions for Europe: A review

The Environmental Services are the analytical interface between Climate Change (CC) impacts on oceans, atmosphere and coasts and the effects of those impacts on the functional activities of the Blue Economy. Previous effort (WP4) was addressed to determine the environmental functions (climate hazards) considered relevant to evaluate the Climate Change impacts on the key Blue Economy sectors studied in SOCLIMPACT (Coastal and Maritime Tourism; Fisheries, Maritime Transport; Marine Energy). The aim of WP5 is to measure the economic value of the alterations of the Environmental Services (quality and quantity), caused by these Climate Change impacts and risks.

The Impact Chains conceptual framework, developed previously within the SOCLIMPACT project, serves as a theoretical guide to analyze the relationships between different climate hazards, ecosystem services and risks. The potential risks have further impacts on the economy, both on the specific sectors studied (WP5) and on the whole economy through the interdependence of the sectors (WP6). In addition, the exposure and sensitivity of the ecosystems and societies are taken into account within this specification, using the Impact Chains as a reference.

At sectoral level, Climate Change risks can impact the market either from the supply side (the costs of providing the service or the activity) or from the demand side (changes in the quantities demanded), or both. In this project, the climate impact on the Aquaculture and Maritime Transport sectors will be studied from the supply side, analyzing changes in the production functions or in the costs supported by providers. Regarding the Marine Energy sector, impacts on both the supply and on the demand side will be considered. In this case, not only providers could face higher costs of production due to weather conditions, but also consumers may alter their demand for cooling or heating provisions, for instance. Finally, the Coastal and Maritime Tourism sector will be analyzed through changes in the demand side. Tourists’ valuation of Environmental Services will be analyzed, together with their behaviour when these services experiment changes due to Climate Change.

The Climate Change impact on the four specified sectors will be analyzed through its direct effect on the markets. However, in the case of the tourism sector, a non-market valuation assessment will be needed in order to identify how the tourist experience value is altered when Environmental Services are damaged.

This deliverable reviews the existing literature regarding the economic valuation of the risks proposed in the sectoral Impact Chains. The aim is to summarize the methodologies used to estimate the impact of Climate Change on the risks considered for the Blue Economy Sectors, and the results obtained. The analysis is organized by sector and risk.