Page - 343 - in Loss and Damage from Climate Change - Concepts, Methods and Policy Options

Chapter14 IntegratedAssessment forIdentifying ClimateFinanceNeeds forLoss andDamage:ACriticalReview AnilMarkandyaandMikelGonzález-Eguino Abstract This chapter looks atwhatwe can learn about possible Loss andDam- age (L&D)andfinanceneeded toaddress it usingeconomic IntegratedAssessment Models (IAMs),whichcalculateeconomicallyoptimal responses toclimatechange mitigationandadaptation in termsofmaximisingwelfare (GDP)afewdecades into thefuture. InterpretingmodelledresidualdamagesasunavoidedL&D,afewresults emerge from the analysis. First, residual damages turn out to be significant under a variety of IAMs, and for a rangeof climate scenarios. Thismeans that if adapta- tion is undertaken optimally, therewill remain a large amount of damages that are not eliminated.Second the ratioof adaptation to total damagesvariesby region, so residual damages alsovary for that reason.Third, residual damageswill dependon the climate scenario aswell as thediscount rate and the assumedparameters of the climatemodel(equilibriumclimatesensitivity)aswellasthoseofthesocioeconomic model(damagefunctions).Theseuncertaintiesareverylargeandsowillbeanypro- jections of residual damages in themedium to long term.The chapter raises other aspects thatcouldinfluenceestimatesofL&D.Animportantoneis that,sinceactual adaptation is very unlikely to be optimal, the amount ofLoss andDamagemaybe influenced by the sources fromwhich adaptation andLoss andDamage programs arefinanced.The level and structure of current limitedfinancial resources is likely to result inadaptation that is significantlybelowtheoptimal level and thus result in significantL&D. Keywords IntegratedAssessmentModels ·LossandDamage ·Residual damage ·Adaptation ·Mitigation A.Markandya (B) ·M.González-Eguino BasqueCentre forClimateChange (BC3),Leioa,Spain e-mail: anil.markandya@bc3research.org ©TheAuthor(s)2019 R.Mechler et al. (eds.),LossandDamage fromClimateChange,ClimateRisk Management,PolicyandGovernance,https://doi.org/10.1007/978-3-319-72026-5_14 343