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ClimAID Annex III An Economic Analysis of Climate Change Impacts and Adaptations in New York State Authors: Robin Leichenko,1 David C. Major, Katie Johnson, Lesley Patrick, and Megan O’Grady 1 Rutgers University Table of Contents Executive Summary ............................................................................................................. 3 1 Introduction ..................................................................................................................... 7 2 Water Resources ............................................................................................................ 19 3 Ocean and Coastal Zones ............................................................................................... 30 4 Ecosystems ..................................................................................................................... 43 5 Agriculture...................................................................................................................... 58 6 Energy ............................................................................................................................ 76 7 Transportation ............................................................................................................... 93 8 Telecommunications .................................................................................................... 103 9 Public Health ................................................................................................................ 112 10 Conclusions ................................................................................................................ 131 11 References ................................................................................................................. 134 Summary 3 Executive Summary This study provides an overview assessment of the potential economic costs of climate change impacts and adaptations to climate change in eight major economic sectors in New York State. These sectors, all of which are included in the ClimAID report are: water resources, ocean and coastal zones, ecosystems, agriculture, energy, transportation, communications, and public health. Without adaptation, climate change costs in New York State for the sectors analyzed in this report may approach $10 billion annually by midcentury. However, there is also a wide range of adaptations that, if skillfully chosen and scheduled, can markedly reduce the impacts of climate change by amounts in excess of their costs. This is likely to be even more true when non-economic objectives such as environment and equity are taken into account. New York State as a whole has significant resources and capacity for effective adaptation responses; however, given the costs of climate impacts and adaptations, it is important that the adaptation planning efforts that are now underway are continued and expanded. Methods The methodology for the study entails a six-step process that utilizes available economic data, interviews, and risk-based assessment to identify and where possible to assign costs of key sectoral vulnerabilities and adaptation options for climate change for eight economic sectors. The study draws conceptually from the general framework of benefit-cost analysis (recognizing its significant limitations in evaluating adaptation to climate change) to provide an overview assessment of the potential costs of key impacts and adaptation options. For all sectors, key economic components with significant potential impact and adaption costs are highlighted. Sector Assessments All of the eight sectors examined will have impacts from climate change, and for all sectors a range of adaptations is available. Because New York State is a coastal state and is highly developed, the largest direct impacts and costs are likely to be associated with coastal areas. Among the sectors in this study, these include the ocean coastal zone, transportation, energy and part of the water sector. However, impacts and costs will be significant throughout the state in sectors such as public health, transportation and agriculture. Impacts must be judged not only on the basis of direct economic costs, but also on the overall importance of sector elements to society. In terms of adaptation costs, the largest costs may be in the transportation sector, with significant adaptation costs for water, ocean coastal zones, energy, agriculture and ecosystems. The largest positive differences between benefits and costs among the sectors are likely to be in ecosystems and public health. In addition to the overall analysis of the report, illustrative cost and benefit projections were made for one or more elements of the sectors. The results in terms of mid-century (2050s) annual costs (in $2010) of impacts are: water resources, $116-203 million; ocean coastal zones, $44-77 million; ecosystems, $375-525 million; agriculture, $140-289 million; energy, $36-73 million; transportation, $100-170 million; communications, $15-30 million, and public health 4 ClimAID $2,998-6,098 million. These figures understate the aggregate expected costs, especially for heavily developed coastal areas, because they are for selected elements of the sectors for which extrapolations relating to climate data could be made. (Because of differences in method and data availability and the extent of coverage within sectors, these numbers are not directly comparable. For example, the high annual costs in public health are partly a function of the U.S. Environmental Protection Agency’s estimate of the value of a statistical life (USEPA 2000; 2010.) The extent to which explicit public planning for adaptation will be required will differ among sectors: energy, communications and agriculture are sectors with regular reinvestment that has the effect of improving the resilience of the sector for present and future climate variability and other factors, and so climate adaptation will be more easily fit into the regular processes of these sectors. For the other sectors, much more public evaluation and planning will be required. Overview assessments by sector are: Water Resources. Water supply and wastewater treatment systems will be impacted throughout the state. Inland supplies will see more droughts and floods, and wastewater treatment plants located in coastal areas and riverine flood plains will have high potential costs of impacts and adaptations. Adaptations are available that will have sizable benefits in relation to their costs. Coastal Zones. Coastal areas In New York State have the potential to incur very high economic damages from a changing climate due to the enhanced coastal flooding due to sea level rise and the development in the area with residential and commercial zones, transportation infrastructure (treated separately in this study), and other facilities. Adaptation costs for coastal areas are expected to be significant, but relatively low as compared to the potential benefits. Transportation. The transportation sector may have the highest climate change impacts in New York State among the sectors studied, and also the highest adaptation costs. There will be effects throughout the state, but the primary impacts and costs will be in coastal areas where a significant amount of transportation infrastructure is located at or below the current sea level. Much of this infrastructure floods already, and rising sea levels and storm surge will introduce unacceptable levels of flooding and service outages in the future. The costs of adaptation are likely to be very large and continuing. Agriculture. For the agriculture sector, appropriate adaptation measures can be expected to offset declines in milk production and crop yields. Although the costs of such measures will not be insignificant, they are likely to be manageable, particularly for larger farms that produce higher value agricultural products. Smaller farms, with less available capital, may have more difficulty with adaptation and may require some form of adaptation assistance. Expansion of agricultural extension services and additional monitoring of new pests, weeds and diseases will be necessary in order to facilitate adaptation in this sector. Summary 5 Ecosystems. Climate change will have substantial impacts on ecosystems in New York State. For revenue-generating aspects of the sector, including winter tourism and recreational fishing, climate change may impose significant economic costs. For other facets of the sector, such as forest-related ecosystems services, heritage value of alpine forests, and habitat for endangered species, economic costs associated with climate change are more difficult to quantify. Options for adaptation are currently limited within the ecosystems sector and costs of adaptation are only beginning to be explored. Development of effective adaptation strategies for the ecosystems sector is an important priority. Energy. The energy sector, like communications, is one in which there could be large costs from climate change if ongoing improvements in system reliability are not implemented as part of regular and substantial reinvestment. However, it is expected that regular investments in system reliability will be made, so that the incremental costs of adaptation for climate change will be moderate. Even with regular reinvestments there may be increased costs from climate change. Moreover, the energy sector is subject to game-changing policies and impacts such as changes in demand from a carbon tax (either directly or via cap and trade)

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