Editing IPCC:AR6/WGII/Chapter-8 (section)

==== 8.3.4.1 Economic (e.g., Income, Assets) Impacts of Climate Change and Vulnerability ====

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While extreme events are not new, the intensity and frequency of extreme events are stacking, leading to additional increase in poverty or vulnerability in some regions, exacerbated by COVID-19, and up against existing development pathways leading to significant impact on economic losses globally ( ''high confidence'' ). There is ''robust evidence'' that many African countries experience climate-related losses in terms of loss of crop yields, destroyed homes, food insecurity through increased food prices, and displacement (Box 8.5; [[#Olsson--2014|Olsson et al., 2014]] ). Attention has been focused on low-income groups, women and children, poor rural communities, and Indigenous Peoples such as the example of the Dupong, an Indigenous Peoples in Ghana using Indigenous strategies to limit adverse impacts of climate change-induced water shortages ( [[#Opare--2018|Opare, 2018]] ). In Kenya, economic L&amp;D during droughts between 2009 and 2011 incurred costs that included trucking emergency water and food supplies, and loss of livestock and livelihoods. Cross-sectoral economic effects were estimated to reduce gross domestic product (GDP) by 2.8% yr −1 ( [[#King-Okumu--2021|King-Okumu et al., 2021]] ). Past studies have similarly shown that in the context of extreme events, such as floods or droughts, the most commonly sold assets are livestock and land. The sale of property particularly reduces the asset base, creates long-term vulnerabilities to future events and can trigger chronic poverty ''(high confidence'' ). People may face food shortages in the future from lack of crop production ( [[#Opondo--2013|Opondo, 2013]] ).The sale of cattle affects the household asset base, as well as important access to animal traction power for farming.

In South Asia, there is ''robust evidence'' of economic impacts of climate change ( [[#Cao--2021|Cao et al., 2021]] ), for example in the Sundarbans (a transboundary ecosystem with components in both India and Bangladesh, with the problem of unproductive livelihoods being common across residents of both countries) observations show local livelihoods are rapidly becoming unproductive (loss of fish, and increasing salination making agriculture increasingly difficult) ( [[#Ghosh--2018|Ghosh, 2018]] ); conditions that are exacerbated by climate change impacts ( ''high confidence'' ). Cyclone and storm surges induced by climate change force saline water into agricultural lands along the coast, which damages crops not only in the year the cyclone hits, but for several years afterwards ( [[#Rabbani--2013|Rabbani et al., 2013]] ). They showed in Shyamnagar Upazilla in Satkhira district the proportion of salinity-free farmland has gone down over the past 20 years, from more than 60% to nil ( [[#Rabbani--2013|Rabbani et al., 2013]] ). Vietnam has also experienced effects of flooding and salinisation in the Mekong delta, coupled with rapid social development. Intensified floods and droughts have dramatically resulted in loss of livelihoods in agriculture and fisheries in some areas of the basin ( [[#Evers--2018|Evers and Pathirana, 2018]] ). In Vietnam, the expected salinisation increases livelihood shifts into areas that are riskier, such as shrimp farming. Furthermore, the Vietnamese Mekong Delta is characterised by strong migration processes towards cities, particularly Ho Chi Min, meaning that abrupt livelihood shifts are already happening. There are emerging examples of Indigenous Peoples affected by climate change in indigenous farming mountain communities of the Nepal Himalaya. ( [[#Sujakhu--2019|Sujakhu et al., 2019]] ). The Philippines has experienced extreme events, such as Typhoon Haiyan in 2013, which left more than 7353 people reported dead or missing, damaged or swept away more than 1.1 million houses and injured more than 27,000 people ( [[#McPherson--2015|McPherson et al., 2015]] ). More than 4 million were displaced. The cost of damages has been estimated at USD 864 million with USD 435 million for infrastructure and USD 440 million for agriculture in affected regions ( [[#McPherson--2015|McPherson et al., 2015]] ).

Sea level rise, coastal flooding and surge inundation are increasingly pressing problems across the urban Pacific, including the urban and coastal population of Vanuatu ( [[#McDonnell--2021|McDonnell, 2021]] ). Pacific region islands, such as Vanuatu ( [[#Handmer--2019|Handmer and Nalau, 2019]] ), are particularly vulnerable to climate change. Kiribati and Tuvalu are impacted by exceptionally high tides that affect the urban atolls of South Tarawa and Funafuti, and cyclonic activity causing extensive economic damage in Tuvalu ( [[#Curtain--2019|Curtain and Dornan, 2019]] ). Limited migration opportunities for low-income households can result in forced immobility, and high tides, sea level rise and cyclonic damages could result in relocation of significant groups of the population.

A pertinent example of economic losses is the example of the Torres Strait in Australia. This example shows evidence of communities living on remote islands. Boigu is a low-lying mud island inundated by the sea during high tides and storm surges. Those most exposed and vulnerable to climate change have limited livelihood assets and face challenges to secure external support with government and others. Place-based values evoke a reluctance to relocate or retreat with economic losses such as community infrastructure, housing and cultural sites ( [[#McNamara--2017|McNamara et al., 2017]] ). In the Great Barrier Reef, Australia sea level rise and sea level global temperature warming affects fisheries’ productivity and tourism ( [[#Evans--2016|Evans et al., 2016]] ). Unprecedented burn area of wild forest fires in Australia between September 2019 and January 2020 ( [[#Boer--2020|Boer et al., 2020]] ) extended over almost 19 million hectares, destroyed over 3000 houses and killed 33 people ( [[#Filkov--2020|Filkov et al., 2020]] ).

The 2018 European heatwave in Northern and Eastern Europe caused multiple and simultaneous crop failures—among the highest observed in recent decades ( ''high agreement'' ). These yield losses were associated with extremely low rainfall in combination with high temperatures between March and August 2018 ( [[#Beillouin--2020|Beillouin et al., 2020]] ). Across Europe, in 2018, people experienced one of the worst harvests in a generation. Northern and Eastern Europe experienced multiple and simultaneous crop failures—among the highest observed in recent decades. These yield losses were associated with extremely low rainfalls in combination with high temperatures between March and August 2018. This compounding of extreme conditions in 2018 led to one of the highest negative relative yield anomalies at the scale of Eastern and Northern Europe, across a large array of crop species ( [[#Beillouin--2020|Beillouin et al., 2020]] ).

Extreme climate events are disproportionately impacting economies of the most vulnerable everywhere ( ''medium evidence, high agreement'' ). In the Caribbean, Central America and USA, Hurricanes Katrina, Harvey, Irma, Maria and Michael are examples of extreme climate events that have displaced households, destroyed homes, and led to loss of income among the poor and marginalised ( [[#Klinenberg--2020|Klinenberg et al., 2020]] ). Puerto Rico was devastated by Hurricane Maria but received less support from the Federal Emergency Management Agency ( [[#García--2021|García, 2021]] ). Evidence is emerging on unequal governance responses in the USA versus Puerto Rico ( [[#Joseph--2020|Joseph et al., 2020]] ). Floods, storms and heatwaves have impacted poorer communities and wildfires in California have impacted many wealthy groups, and also infrastructure used by all, for example, with lengthy electrical power blackouts. However, they have particularly impacted those vulnerable to disasters, such as undocumented Latino/a and Indigenous immigrants in the case of the Thomas Fire in California’s Ventura and Santa Barbara counties ( [[#Méndez--2020|Méndez et al., 2020]] ). In 2017, Hurricane Irma hit Ragged Island in the Bahamas as a category 5 storm, leaving the island in ruins and deemed ‘unliveable’ by its authorities, with most infrastructure left as rubble, no essential utilities remained, schools and health clinics were in ruins and the stench of dead animals was overwhelming. This storm resulted in significant economic L&amp;D by the community through loss of their homes, churches, schools, agricultural land and infrastructure ( [[#Thomas--2020|Thomas and Benjamin, 2020]] ).

Across South America, groups of farmers, children, elderly, Indigenous Peoples and traditional communities are increasingly exposed to floods, droughts, wild forest fires and losses in crop yields, resulting in significant economic costs ( ''medium evidence, high agreement'' ) (see Box 8.6). Urban communities, in particular those living in informal settlements, are exposed to heatwaves. In Peru, analysis of water risks posed by climate change in the Vilcanota-Urubamba basin, Southern Peru, revealed seasonal water scarcity and glacial lake outburst floods (GLOFs), pose a serious threat for highly exposed and vulnerable people. It showed that very high-risk potentials of 134 current and another 6 out of 20 future glacier lakes as potentially highly susceptible to outburst floods. A total of eight existing and one possible future lakes indicate future river discharge could be reduced by some 2–11% (7–14%) until 2050 (2100). Farmers, in particular smallholders, in some regions face losses to irrigated agriculture and hydropower capacity with effects on water scarcity and food security ( [[#Drenkhan--2019|Drenkhan et al., 2019]] ). However, other assessments also point towards positive effects of water reservoirs and hydropower in terms of water storage, flood management and irrigation ( [[#Ahmad--2014|Ahmad et al., 2014]] ; [[#Liu--2015|Liu et al., 2015]] ; [[#Kuraku--2019|Kuraku et al., 2019]] )

There are additional dimensions of economic losses that are of a more diffuse nature. In particular, climate change is also expected to negatively affect labour supply, particularly in temperature exposed industries (agriculture, mining, manufacturing, construction), due to increases in the number of extreme hot days ( [[#Graff%20Zivin--2014|Graff Zivin and Neidell, 2014]] ; [[#Garg--2020|Garg et al., 2020]] ). Low-income countries have on average a large share of workers in such industries and will thus be especially hard hit. Aside from labour supply, a number of studies also document negative impacts to manufacturing productivity ( [[#Acharya--2018|Acharya et al., 2018]] ; [[#Pogacar--2018|Pogacar et al., 2018]] ; [[#Somanathan--2021|Somanathan et al., 2021]] ). These findings provide a channel to explain macroeconomic consequences of climate change ( [[#Burke--2015|Burke et al., 2015]] ). However, there are also non-economic costs in that extreme heat will cause increased discomfort to workers, such as psychological stress, disease and in extreme cases, death among the workforce in developing economies, as well as tropical and sub-tropical countries ( [[#Ansah--2021|Ansah et al., 2021]] ).

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