Distr.
GENERAL
FCCC/SBSTA/1996/7/Add.3
22 February 1996
ENGLISH ONLY
SUBSIDIARY BODY FOR SCIENTIFIC AND TECHNOLOGICAL ADVICE
Second session
Geneva, 27 February - 4 March 1996
Item 4 (a) of the provisional agenda
SCIENTIFIC ASSESSMENTS
CONSIDERATION OF THE SECOND ASSESSMENT REPORT OF
THE
INTERGOVERNMENTAL PANEL ON CLIMATE
CHANGE
Addendum
THE ECONOMIC AND SOCIAL DIMENSIONS OF CLIMATE
CHANGE: CONTRIBUTION OF WORKING GROUP III OF THE
INTERGOVERNMENTAL PANEL ON CLIMATE
CHANGE
Note by the
secretariat
CONTENTS
Paragraphs Page
I. INTRODUCTION 1 - 5 2
II. OBSERVATIONS 6 - 9 3
Annex
IPCC Working Group III: Tables of contents of the
supporting chapters 4
GE.96-
I. INTRODUCTION
1. Working Group III (WG III) of the Intergovernmental Panel on
Climate Change (IPCC) was restructured in 1992 and charged with
conducting technical assessments of the socio-economic dimensions of
impacts, adaptation and mitigation of climate change over both the
short and the long term at the regional and global levels. Its work
programme, approved by the IPCC in June 1993, consisted of two
parts:
(a) An evaluation of emission scenarios to be completed in time
for the 1994 Special Report of the IPCC; and
(b) An assessment of the literature on socio-economic issues
related to climate change for the IPCC Second Assessment
Report.
2. The mandate of WG III as given by the IPCC included the
following:
It will place the socio-economic perspectives of climate change in
the context of sustainable development. In particular, and in
accordance with the United Nations Framework Convention on Climate
Change (UNFCCC), the work of the WG III will be comprehensive, cover
all relevant sources, sinks and reservoirs of greenhouse gases and
adaptation, and comprise all economic sectors.
3. The Working Group was enjoined to assess available literature
in these fields. It should give due recognition in its work to the
Rio Declaration on Environment and Development, Agenda 21 and, in
particular, the UNFCCC. It should not make policy
judgements.
4. The writing teams were composed of economists and, to a lesser
extent, social scientists and other experts. Each team included at
least one expert from a developing country.
5. WG III sponsored workshops in Brazil, Italy, Japan and Kenya;
each of these had a topical and regional component. WG III also
contributed to the IPCC workshop on Article 2 of the UNFCCC, held at
Fortaleza, Brazil, in October 1994. The proceedings of the following
workshops have been published:
- Policy Instruments and their Implications/Asia and the Pacific
(Tsukuba, Japan, 13 to 20 January 1994)
- Equity and Social Considerations/Africa
(Nairobi, Kenya, 18 to 22 July 1994)
II. OBSERVATIONS
6. The contribution of WG III to the Second Assessment Report
consists of a Summary for Policymakers and 11 supporting chapters.
Its report assesses a large part of the existing literature on the
socio-economic issues related to climate change and identifies areas
in which a consensus has emerged on key issues and areas where
differences exist. According to the Summary for Policymakers, the
chapters (see annex to the present note) have been arranged so that
they cover several key issues; the order of the chapters, however,
does not fully correspond to the order of the issues:
(a) First, frameworks for socio-economic assessments of
costs and benefits of action and inaction are described.
Particular attention is given to the applicability of cost-benefit
analysis, the incorporation of equity and social considerations, and
consideration of intergenerational equity issues (chapters 1, 2, 3,
4, 5 and 10);
(b) Second, the economic and social
benefits of limiting greenhouse gas emissions
and enhancing sinks are reviewed (chapter 6);
(c) Third, the economic, social and environmental
costs of mitigating greenhouse gases are
assessed (chapters 8 and 9);
(d) Fourth, generic mitigation and adaptation response
options are assessed and the costs and effectiveness of
different response options are summarized (chapter 7);
(e) Finally, the report provides an economic assessment
of policy instruments to combat climate change (chapter
11).
7. The assessment of the literature on the socio-economic issues
related to climate change focuses on the economic literature;
material from other social sciences will be found mostly in chapter 3
on equity and social considerations.
8. The literature on socio-economic aspects of climate change is
in several areas very controversial. Value judgements and policy
preferences may largely determine which scientific approaches will be
followed or rejected. In this regard, WG III notes that it provides
an assessment of the current state of knowledge -- what we know and
do not know -- and not a prescription for policy
consideration.
9. Issues that Parties may consider in relation to the WG III
report are given in document FCCC/SBSTA/1996/7.
Annex
IPCC WORKING GROUP III: TABLES OF CONTENTS OF
THE
SUPPORTING
CHAPTERS(1)
Chapter 1. Introduction: Scope of the assessment
(73 pages)
Summary
1.1 Introduction
1.2 Features of the climate change
1.3 Contribution of economics
1.4 Equity
1.5 Economics of policy actions
1.6 Sustainable development
Endnotes
References
This chapter is an introduction to the contribution of
Working Group III to the Second Assessment Report. It describes the
general characteristics of climate change, the possible contributions
of economics in addressing the problem, and general issues such as
equity, the economics of policy actions, and sustainable
development.
Chapter 2. Decision-making frameworks for addressing
climate change (32 pages)
Summary
2.1 Introduction
2.2 The context for climate change decision-making
2.3 Quantitative models of decision-making
2.4 Implications for national decision-making frameworks
under the UNFCCC
Endnotes
References
This chapter discusses possible decision-making frameworks
related to climate change. It describes and reviews the theoretical
literature concerning decision-making, indicating how different
frameworks can lead to different conclusions. It outlines several
different frameworks such as global optimization, sequential
decision-making, the decision-making process (how decisions are
made), and collective decision-making (a framework for negotiating
decisions).
Chapter 3. Equity and social considerations (99
pages)
Summary
3.1 Introduction
3.2 Equity in international law and in the UNFCCC
3.3 Principal differences among regions and countries
3.4 Distributing the costs of coping: Impacts, risks and
international insurance
3.5 Distributing future emissions and abatement costs
3.6 Equity within countries
3.7 Procedural fairness in international climate change
processes
3.8 Conclusions
Endnotes
References
The chapter begins by reviewing concepts of equity and
issues that must be considered in efforts to apply these concepts. It
then looks at these broad concepts within the tradition of
international law and the specific context of the UNFCCC and
considers several ways in which this text assigns specific meaning to
equity. It also analyses in detail several specific aspects of
equity: international equity in coping with the impacts of climate
change and associated risks, international equity in efforts to limit
climate change, equity and social considerations within countries,
and equity in international processes.
Chapter 4. Intertemporal equity, discounting, and
economic efficiency (39 pages)
Summary
4.1 Introduction
4.2 Building blocks of the analytical approach
4.3 Perspective approach
4.4 Descriptive approach
4.5 Conclusion: Reconciling the two approaches
Endnotes
References
This chapter considers methods for comparing costs and
benefits that arise at different times, especially where trade-offs
occur across generations, and how these trade-offs involve issues of
intertemporal equity. The topic raises questions of ethics and
morals, because it involves reaching judgements about what is fair or
just, and also of economics, because comparisons across time are
necessarily judged in the light of changing standards of living over
time, opportunities for productive investment, and trade-offs across
generations.
Chapter 5. Applicability of techniques of cost-benefit
analysis to climate change
(47 pages)
Summary
5.1 Introduction
5.2 Cost-benefit analysis
5.3 Unique features of climate change
5.4 Cost-benefit analysis in the context of climate change
5.5 Issues
5.6 Conclusion
Endnotes
References
The objective of this chapter is to examine how and under
what circumstances cost-benefit analysis can make a contribution to
the resolution of the central questions now facing decision-makers
about global climate change and the reduction of emissions. After
cost-benefit analysis has been defined and put into the context of
the unique features of climate change, key issues such as risk
uncertainty, irreversibility, valuation, discounting, equity and
multiple criteria are discussed.
Chapter 6. The social costs of climate change:
Greenhouse damage and the benefits
of control (92 pages)
Summary
6.1 Conceptual framework
6.2 Damage estimates for benchmark warming (2 x
CO2)
6.3 Damage estimates for longer-term warming
6.4 Climate catastrophes and surprises
6.5 Regional implications of climate change
6.6 From greenhouse damages to abatement benefits
6.7 The secondary benefits of abatement strategies
6.8 Conclusions
Endnotes
References
This chapter deals with the nature of damages caused by
climate change. Damages here refer to the consequences of climate
change for individuals and social welfare from an economics point of
view. The chapter assesses the possible aggregate scale, the
geographic distribution, and the nature of those damages. It raises
certain issues relating to decision-making rules, since alternative
ethical approaches to harm done to future generations have
implications for damage assessment.
Chapter 7. A generic assessment of response options
(59 pages)
Summary
7.1 Introduction
7.2 A contextual framework
7.3 Criteria for assessment
7.4 Mitigation options
7.5 Adaptation options
7.6 An integrated approach
7.7 Regional differences and international cooperation
Endnotes
References
This chapter surveys the set of response options feasible
from an economic perspective in order to assess the scope and
priorities of policies. Mitigation and adaptation options are
reviewed in terms of applicability, cost-effectiveness, and social
acceptability. The scope for integrated response options is evaluated
and an analysis is presented of the extent to which various options
may provide a basis for international policy
cooperation.
Chapter 8. Estimating the cost of mitigating greenhouse
gases (52 pages)
Summary
8.0 Introduction
8.1 Costs: Definition and determinants
8.2 Patterns of development and technological change
8.3 Differences among models and their results
Endnotes
References
This chapter presents a discussion of the critical
determinants likely to influence the overall cost of climate policies
and of the main methodologies employed to arrive at them. It examines
the various concepts of costs used in the literature; the
relationship between cost assessment and assumptions about
development patterns and technical change that underlie any economic
scenario used to assess mitigation costs. It also reviews the main
methodological approaches for costing assessment, the key assumptions
likely to determine the numerical result and the lessons derived from
modelling debates in the energy field and in the forestry
sector.
Chapter 9. A review of mitigation cost studies (119
pages)
Summary
9.1 Introduction
9.2 Review of existing studies of the costs of reducing
CO2 emissions
9.3 Studies of the costs of carbon sequestration
9.4 Studies of the costs of reducing non-energy GHG
emissions
Endnotes
References
This chapter reviews, compares, and summarizes numerous
recent studies of the costs of reducing greenhouse gas emissions and
carbon sequestration.
Chapter 10. Integrated assessment of climate change: An
overview and comparison of approaches and results (37
pages)
Summary
10.1 Introduction
10.2 Approaches to integrated assessment
10.3 Elements of an integrated assessment model
10.4 Overview of existing integrated assessment models
10.5 First results from integrated assessment models
10.6 Strengths and limitations of current integrated
assessments
Endnotes
References
After defining integrated assessment and its purposes, the
chapter discusses the different approaches to it. Elements of models
for integrated assessment, the first results of these models and the
challenges faced by them are reviewed.
Chapter 11. An economic assessment of policy
instruments to combat climate change
(72 pages)
Summary
11.1 Introduction
11.2 Greenhouse policy instruments and criteria for policy
assessment
11.3 The domestic policy context
11.4 Regulations, voluntary agreements and other
non-market based instruments
11.5 Market-based policy instruments
11.6 Policy implementation issues
11.7 Comparative assessment of greenhouse policy
instruments
Endnotes
References
The aim of this chapter is to provide an economic
assessment of possible policy instruments to manage greenhouse gas
emissions. The factors affecting the policy mix for control of
greenhouse gas emissions are reviewed, using guiding principles and
taking into account the general international legal framework in
which the Convention must operate.
- - - - -
1. Titles of chapters and subheadings
are listed as given in the IPCC Second Assessment Report.