Editing IPCC:AR6/SROCC/Chapter-5 (section)

==== 5.4.2.3 Monetary and Material Wealth ====

<div id="section-5-4-2-3monetary-and-material-wealth-block-1"></div>

<span id="wealth-generated-from-fisheries"></span>
===== 5.4.2.3.1 Wealth generated from fisheries =====

Global gross revenues from marine fisheries were around 150 billion in 2010 USD (Swartz et al., 2013; Tai et al., 2017). Capture fisheries provide full-time and part-time jobs for an estimated 260 ± 6 million people in the 2000s period, of whom 22 ± 0.45 million are small ‐ scale fishers (Teh and Sumaila, 2013 <sup>[[#fn:r1511|1511]]</sup> ). Small-scale fisheries are important for the livelihood and viability of coastal communities worldwide (Chuenpagdee, 2011 <sup>[[#fn:r1512|1512]]</sup> ). AR5 concluded with ''low confidence'' that climate change will lead to a global decrease in revenue with regional differences that are driven by spatial variations of climate impacts on and the flexibility and capacities of food production systems (Pörtner et al., 2014 <sup>[[#fn:r1513|1513]]</sup> ). AR5 also highlighted the high vulnerability of mollusc aquaculture to ocean acidification. For example, the oyster industry in the Pacific has lost nearly 110 million USD in annual revenue due to ocean acidification (Ekstrom et al., 2015 <sup>[[#fn:r1514|1514]]</sup> ). This section examines the rapidly growing literature assessing the risks of climate change on fisheries and aquaculture sectors, and the potential interaction between climatic and non-climatic drivers on the economics of fisheries. However, new evidence on observed economic impacts of climate change on fisheries since AR5 is limited.

Since AR5, projections on climate change impacts on the economics of marine fisheries have incorporated a broader range of social-economic considerations. Driven by shifts in species distributions and maximum catch potential of fish stocks (Section 5.4.1), if the ex-vessel price of catches remains the same, marine fisheries maximum revenue potential are projected to be negatively impacted in 89% of the world’s fishing countries under the RCP8.5 scenario by the 2050s relative to the current status, with projected global decreases of 10.4 ± 4.2% and 7.1 ± 3.5% under RCP8.5 and RCP2.6, respectively, by 2050 relative to 2000 (Lam et al., 2016). While the projected changes in revenues are sensitive to price scenarios (Lam et al., 2016 <sup>[[#fn:r1515|1515]]</sup> ), future maximum revenue potential is reduced under high emission scenarios (Sumaila et al., 2019 <sup>[[#fn:r1517|1517]]</sup> ). For example, when the elasticity of seafood price in relation to their supply was modelled explicitly, fisheries maximum revenue potential under a 1.5°C atmospheric warming scenario was projected to be higher than for 3.5°C warming by 7.4% (13.1 billion USD) ± 2.3%, across projections from three CMIP5 models (Sumaila et al., 2019 <sup>[[#fn:r1518|1518]]</sup> ). Accounting for the subsequent impacts on the dependent communities and relative to the 1.5°C warming scenario, that study also projected a decrease in seafood workers’ incomes of 7.8% (3.7 billion USD) ± 2.3% and an increase in households’ seafood expenditure by the global population of 3.2% (6.3 billion USD) ± 3.9% annually under a 3.5°C warming scenario (Sumaila et al., 2019 <sup>[[#fn:r1519|1519]]</sup> ).

Fisheries management strategies and fishing effort affect the realised catch and economic benefits of fishing (Barange, 2019 <sup>[[#fn:r1520|1520]]</sup> ). Modelling analysis of fish stocks with available data worldwide showed that for RCP6.0, adaptation of fisheries by accommodating shifts in species distribution and abundance, as well as rebuilding existing overexploited or depleted fish stocks, is projected to lead to substantially higher global profits (154%), harvest (34%), and biomass (60%) in the future, relative to a no adaptation scenario. However, the total profit, harvest and biomass are negatively affected even with the full adaptation scenario under RCP8.5 (Gaines et al., 2018 <sup>[[#fn:r1521|1521]]</sup> ). Overall, climate change impacts on the abundance, distribution and potential catches of fish stocks (see Section 5.3.1) are expected to reduce the maximum potential revenues of global fisheries ( ''high agreement, medium evidence, medium confidence'' ). These impacts on fisheries will increase the risk of impacts on the income and livelihoods of people working in these economic sectors by 2050 under high greenhouse gas emission scenarios relative to low emission scenario ( ''high confidence'' ). Rebuilding overexploited or depleted fisheries can help improve economic efficiency and reduce climate risk, provided that emissions are greatly reduced ( ''medium confidence'' ).

The economic implications of climate change on fisheries vary between regions and countries because of the differences in exposure to revenue changes and the sensitivity and adaptive capacity of the fishing communities to these changes (Hilmi et al., 2015 <sup>[[#fn:r1522|1522]]</sup> ). Regions where the maximum potential revenue is projected to decrease coincide with areas where indicators such as human development index suggest high economic vulnerability to climate change (Barbier, 2015 <sup>[[#fn:r1523|1523]]</sup> ; Lam et al., 2016 <sup>[[#fn:r1524|1524]]</sup> ). Many coastal communities in these regions rely heavily on fish and fisheries as a major source of animal proteins, nutritional needs, income and job opportunities (FAO, 2019). Negative impacts on the catch and total fisheries revenues for these countries are expected to have greater implications for jobs, economies, food and nutritional security than the impacts on regions with high Human Development Index (Allison et al., 2009 <sup>[[#fn:r1525|1525]]</sup> ; Srinivasan et al., 2010 <sup>[[#fn:r1526|1526]]</sup> ; Golden et al., 2016 <sup>[[#fn:r1527|1527]]</sup> ; Blasiak et al., 2017 <sup>[[#fn:r1528|1528]]</sup> ). Climate change impacts to coral reefs and other fish habitats, as well as to targeted fish and invertebrate species themselves are expected to reduce harvests from small-scale, coastal fisheries by up to 20% by 2050, and by up to 50% by 2100, under RCP8.5 (Bell et al., 2018a <sup>[[#fn:r1529|1529]]</sup> ). Therefore, climate risk to communities that are strongly dependent on fisheries associated with ecosystems that are particularly sensitive to climate change such as coral reefs will have be particularly high (Cinner et al., 2016 <sup>[[#fn:r1530|1530]]</sup> ) ( ''high confidence'' ).

Climate change may also worsen non-climate related socioeconomic shocks and stresses, and hence is an obstacle to economic developments (Hallegatte et al., 2015 <sup>[[#fn:r1531|1531]]</sup> ). Climate risk on the economics of fishing is projected to be higher for tropical developing countries where existing adaptive capacity to the risk is lower, thereby challenging their sustainable economic development ( ''high confidence'' ). However, observed impacts are not yet well documented (Lacoue-Labarthe et al., 2016 <sup>[[#fn:r1532|1532]]</sup> ) , and there are many uncertainties relating to how climate change would affect the dynamics of fishing costs, with consequent adjustment of fishing effort that might intensify or lessen the overcapacity issue. Studies have attempted to project how fishers may respond to changes in fish distribution and abundance by incorporating different management systems (Haynie and Pfeiffer, 2012 <sup>[[#fn:r1533|1533]]</sup> ; Galbraith et al., 2017 <sup>[[#fn:r1534|1534]]</sup> ). However, the impacts of climate change on management effectiveness and trade practices is still inadequately understood (Galbraith et al., 2017 <sup>[[#fn:r1535|1535]]</sup> ).

<div id="section-5-4-2-3monetary-and-material-wealth-block-2"></div>

<span id="wealth-generated-from-coastal-and-marine-tourism-sector"></span>
===== 5.4.2.3.2 Wealth generated from coastal and marine tourism sector =====

Tourism is one of the largest sectors in the global economy. Between 1995‒1998 and 2011‒2014, the average total contribution of tourism to global GDP increased from 69 billion USD (6.8%) to 166 billion USD (8.5%) respectively, and generated more than 21 million jobs between 2011‒2014 (UNCTAD, 2018 <sup>[[#fn:r1536|1536]]</sup> ). Coastal tourism and other marine-related recreational activities contributes substantially to the tourism sector (Cisneros-Montemayor et al., 2013 <sup>[[#fn:r1537|1537]]</sup> ; O’Malley et al., 2013 <sup>[[#fn:r1538|1538]]</sup> ; Spalding et al., 2017 <sup>[[#fn:r1539|1539]]</sup> ; Giorgio et al., 2018 <sup>[[#fn:r1540|1540]]</sup> ; UNWTO, 2018 <sup>[[#fn:r1541|1541]]</sup> ). For example, it is estimated that around 121 million people a year participated in marine-based recreational activities, generating  47 billion in 2003 USD in expenditures and supporting one million jobs (Cisneros-Montemayor and Sumaila, 2010 <sup>[[#fn:r1542|1542]]</sup> ). Tourism is one of the main industries that provides opportunities for social and economic development (Jiang and DeLacy, 2014 <sup>[[#fn:r1543|1543]]</sup> ), and marine tourism is particularly important for many coastal developing countries and Small Island Developing States (SIDS). AR5 identified the tourism sector in the Caribbean region as particularly vulnerable to climate change effects, due to hurricanes, whilst SR15 concluded that warming will directly affect climate-dependent tourism markets on a worldwide basis ( ''medium confidence'' ) (Hoegh-Guldberg et al., 2018 <sup>[[#fn:r1544|1544]]</sup> ). This assessment provides updates since AR5 and SR15.

Empirical modelling of future risks to tourism is based on projected climate impacts (Section 5.3) for relevant coastal ecosystems, including degradation or loss of beach and coral reef assets (Weatherdon et al., 2016 <sup>[[#fn:r1545|1545]]</sup> ) (Section 4.3.3.6.2). These projections are developed from the relationship between the economic benefits generated from coral reef related tourism with observed characteristics of coral reefs, the characteristics of tourism activities. Based on scenarios of projected future warming and decreases in coral reef coverage, a global loss of tourism and recreation value in the near-future (2031‒2050) of 2.57–2.95 billion yr -1 in 2000 USD is projected under RCP2.6, and of 3.88‒5.80 billion yr -1 in 2000 USD under RCP8.5 (Chen et al., 2015 <sup>[[#fn:r1546|1546]]</sup> ). Opinion surveys in four countries suggest that if severe coral bleaching persists in the Great Barrier Reef, tourism in adjacent areas could greatly decline, from 2.8 million to around 1.7 million visitors per year, equivalent to more than 1 billion AUS (~0.69 billion USD using exchange rate in 2019), that is, in tourism expenditure and with potential loss of around 10,000 jobs (Swann and Campbell, 2016 <sup>[[#fn:r1547|1547]]</sup> ).

Many coastal tourism destinations are exposed to risks of flooding, SLR and coastal squeeze on coastal ecosystems (Lithgow et al., 2019 <sup>[[#fn:r1548|1548]]</sup> ) (Section 5.3); there are also other climate related-risks. Droughts, which are projected to be more frequent, will also impact the tourism industry (and local food security) through water and food shortages (Pearce et al., 2018 <sup>[[#fn:r1549|1549]]</sup> ). If climate change and ocean acidification reduce the seafood supply, the attractiveness of coastal regions for tourists will also decrease (Wabnitz et al., 2017 <sup>[[#fn:r1550|1550]]</sup> ). North Atlantic hurricanes and tropical storms have increased in intensity over the last 30 years, with climate projections indicating an increasing trend in hurricane intensity (Chapter 6). Three major Caribbean storms, Harvey, Irma and Maria, occurred in 2017, with loss and damage to the tourism industries of Dominica, the British Virgin Islands, and Antigua and Barbuda estimated at 2.2 billion USD, and environmental recovery costs estimated at 6.8 million USD (UNDP, 2017 <sup>[[#fn:r1551|1551]]</sup> ). Pacific tourist destinations, which tend to focus on nature-based and marine activities, are also at high risk of extreme events and other climate change impacts (Klint et al., 2015 <sup>[[#fn:r1552|1552]]</sup> ). However, global tourism has a high carbon footprint (flights, cruises, etc.) (Lenzen et al., 2018 <sup>[[#fn:r1553|1553]]</sup> ), so any reduction in the intensity of this sector would help mitigate climate change.

Evidence from recent studies on projected climate risks on recreational fishing is equivocal, with the direction of impacts depending on the location, species targeted and societal context. For example: poleward range shifts of marine fish (Section 5.2.3) could yield new opportunities for recreational fishing in mid- to high-latitude regions (DiSegni and Shechter, 2013 <sup>[[#fn:r1554|1554]]</sup> ); projected increases in air temperature may enable longer fishing days in some area (Dundas and von Haefen, 2015 <sup>[[#fn:r1555|1555]]</sup> ); and extreme events may alter the composition of recreational fishing catches (Santos et al., 2016 <sup>[[#fn:r1556|1556]]</sup> ). Since climate risks to recreational fishing vary largely depending on the responses of the targeted species to climate-related pressures, there is ''low confidence'' in the overall risk to the activity.

Overall, evidence since AR5 and SR15 confirms that climate impacts to coastal ecosystems would increase risks to coastal tourism, particularly under high emission scenarios ( ''medium confidence'' ). Economic impacts will be greatest for those developing countries where tourism is the main source of foreign revenue ( ''medium'' to ''high evidence'' ).

<div id="section-5-4-2-3monetary-and-material-wealth-block-3"></div>

<span id="property-values"></span>
===== 5.4.2.3.3 Property values =====

The integrity of ecosystems and their services can affect the value of human assets, particularly coastal properties and infrastructure (Hoegh-Guldberg et al., 2018 <sup>[[#fn:r1557|1557]]</sup> ). Climate change is expected to have negative impacts on coastal properties and their value through the loss and damage caused by SLR, increased storm intensity (hurricanes and cyclones), heat waves, floods, droughts and other extreme events, particularly in tropical SIDS (Chapter 4). Natural disasters already cost Pacific Island Countries and Territories between 0.5‒6.6% of GDP yr -1 (World Bank, 2017 <sup>[[#fn:r1558|1558]]</sup> ), with localised damages and losses from individual storms far exceeding these estimates (e.g., 64% of Vanuatu’s GDP for Cyclone Pam in 2015). The impacts of natural disasters on Jamaica’s coastal transport infrastructure are currently estimated to be a significant proportion of their GDP, and such costs are projected to increase substantially in the next few decades under climate change (UNCTAD, 2017 <sup>[[#fn:r1559|1559]]</sup> ; Monioudi et al., 2018 <sup>[[#fn:r1560|1560]]</sup> ). In 2015, tropical storm Erika devastated Dominica causing 483 million USD in damages and losses (mostly related to transport, housing and agriculture), equivalent to 90% of Dominica’s GDP (World Bank, 2017 <sup>[[#fn:r1561|1561]]</sup> ). For the USA, Ackerman and Stanton (2007) forecast that annual real estate losses due to climate change could increase from 0.17% of GDP in 2025 to 0.36% in 2100, with Atlantic and Gulf Coast states being the most vulnerable. Other North American studies have shown that informed coastal property owners are willing to initially invest in infrastructure to counter climate change impacts (McNamara and Keeler, 2013 <sup>[[#fn:r1562|1562]]</sup> ); however, they would avoid further investment if adaptation costs increase substantially and there are greater risks of long-term impacts (Putra et al., 2015 <sup>[[#fn:r1563|1563]]</sup> ).

The impacts of changing marine ecosystems and ecosystem services on the value of human assets need to consider the risk perception, future development and adaptation responses of human communities (Section 5.5.2, Chapter 4) (Bunten and Kahn, 2014 <sup>[[#fn:r1564|1564]]</sup> ). For example, the potential for climate impacts on the value of coastal real estate will depend on the changing insurance market or the cost of adaptation measures, which in turn depend on the willingness to pay by asset holders and wider society, including local and national governments. Further research is needed to discount valuations for potential losses that may occur in the future but with uncertain occurrence, and to improve real estate loss estimates over local to regional scales.

Marine ecosystem services contribute to climate moderation and coastal defenses (Section 5.4.1.2). However, while the above studies in this section acknowledge the contribution of many climate impacts on real estate and infrastructure through ecosystem losses and degradation, often they are not accounted for in quantitative economic impact assessments. Overall, there is ''high confidence'' that SLR, increases in storm intensity and other extreme events will impact the values of coastal real estates and infrastructure, particularly in tropical SIDS, through the risk and impacts of direct physical damages. However, there is ''low confidence'' that impacts due to underlying loss and damage of ecosystems and their services are being similarly accounted for.

<div id="section-5-4-2-4risk-and-opportunities-for-ocean-economy"></div>

<span id="risk-and-opportunities-for-ocean-economy"></span>