Editing IPCC:AR6/WGII/Chapter-11 (section)

== 11.5 Cross-Sectoral and Cross-Regional Implications ==

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The impacts and adaptation processes described in Sections 11.3 and 11.4 are focused on specific sectors, systems and Indigenous Peoples. Added complexity, risk and adaptation potential stem from cross-sectoral and cross-regional interdependencies.

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=== 11.5.1 Cascading, Compounding and Aggregate Impacts ===

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==== 11.5.1.1 Observed Impacts ====

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Climate impacts are cascading, compounding and aggregating across sectors and systems due to complex interactions ( ''high confidence'' ) ( [[#Pescaroli--2016|Pescaroli and Alexander, 2016]] ; [[#Challinor--2018|Challinor et al., 2018]] ; [[#Zscheischler--2018|Zscheischler et al., 2018]] ; [[#Steffen--2019|Steffen et al., 2019]] ; [[#AghaKouchak--2020|AghaKouchak et al., 2020]] ; [[#CoA--2020e|CoA, 2020e]] ; [[#Lawrence--2020b|Lawrence et al., 2020b]] ; [[#Simpson--2021|Simpson et al., 2021]] ) (Boxes 11.1, 11.3, 11.4, 11.5 and 11.6). Cascading impacts propagate via interconnections and systemic factors, including supply chains, shared reliance on connected biophysical systems (e.g., water catchments and ecosystems), infrastructure, essential goods and services and the exercise of governance, leadership, regulation, resources and standard practices (e.g., in planning and building codes), including lock-in of past decisions and experience ( [[#CSIRO--2018|CSIRO, 2018]] ; [[#Lawrence--2020b|Lawrence et al., 2020b]] ). The capacity of critical systems such as information, communication and technology, water infrastructure, health care, electricity and transport networks, is being stretched, with impacts cascading to other systems and places, exacerbating existing hazards and generating new risks ( [[#Cradock-Henry--2017|Cradock-Henry, 2017]] ) (11.3.6; 11.3.10; Box 11.1). Temporal or spatial overlap of hazards (e.g., drought, extreme heat and fire; drought followed by extreme rainfall) are compounding impacts ( [[#Zscheischler--2018|Zscheischler et al., 2018]] ) and affecting multiple sectors.

Extreme events such as heatwaves, droughts, floods, storms and fires have caused deaths and injuries ( [[#Deloitte--2017a|Deloitte, 2017a]] ) (11.3.5.1), and affected many households, communities and businesses via impacts on ecosystems, critical infrastructure, essential services, food production, the national economy, valued places and employment. This has created long-lasting impacts (e.g., mental health, homelessness, health incidents and reduced health services) ( [[#Brown--2017|Brown et al., 2017]] ; [[#Brookfield--2018|Brookfield and Fitzgerald, 2018]] ; [[#Rychetnik--2019|Rychetnik et al., 2019]] ) and reduced adaptive capacity ( [[#Friel--2014|Friel et al., 2014]] ; [[#O’Brien--2014|O’Brien et al., 2014]] ; [[#Ding--2015|Ding et al., 2015]] ; [[#CoA--2020e|CoA, 2020e]] ) (Box 11.1, Box 11.3, 11.3.1–11.3.10).

In New Zealand, extreme snow, rainfall and wind events have combined to impact road networks, power and water supplies and have impeded interdependent wastewater and stormwater services and business activities ( [[#Deloitte--2019|Deloitte, 2019]] ; [[#Lawrence--2020b|Lawrence et al., 2020b]] ; [[#MfE--2020a|MfE, 2020a]] ) (Box 11.4). Community and infrastructure services are periodically disrupted during extreme weather events, triggering impacts from the interdependencies across enterprises and individuals ( [[#Glavovic--2014|Glavovic, 2014]] ; [[#Paulik--2021|Paulik et al., 2021]] ).

Slow-onset climate change impacts have also had cascading and compounding effects. For example, degradation of the GBR by ocean heating, acidification and non-climatic pressures ( [[#Marshall--2019|Marshall et al., 2019]] ), repeated pluvial, fluvial and coastal flooding of some settlements ( [[#Paulik--2019a|Paulik et al., 2019a]] ; [[#Paulik--2020|Paulik et al., 2020]] ), long droughts and water insecurity in rural communities ( [[#Tschakert--2017|Tschakert et al., 2017]] ) and the gradual loss of species and ecological communities have caused substantial ecological, social and economic losses. Indigenous Peoples have especially been impacted by multiple and complex losses ( [[#Johnson--2021|Johnson et al., 2021]] ) (11.4).

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==== 11.5.1.2 Projected Impacts ====

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Cascading, compounding and aggregate impacts are projected to grow due to a concurrent increase in heatwaves, droughts, fires, storms, floods and sea level ( ''high confidence'' ) ( [[#CSIRO--2020|CSIRO, 2020]] ; [[#Lawrence--2020b|Lawrence et al., 2020b]] ). Urban wastewater, stormwater and water supply systems are particularly vulnerable in New Zealand ( [[#Paulik--2019a|Paulik et al., 2019a]] ; [[#Hughes--2021|Hughes et al., 2021]] ) to pluvial flooding (Box 11.4) and to sea level rise (SLR) (Box 11.6), with flow-on effects to settlements, insurance and finance sectors, and governments ( [[#Lawrence--2020b|Lawrence et al., 2020b]] ). Furthermore, consecutive heavy rainfall events in late summer and autumn, following drought conditions in low-lying modified wetland areas, have implications for the operation of flood control infrastructure as increased rainfall intensity, land subsidence and sea level rise (SLR) compound and result in the retention of floodwaters ( [[#Pingram--2021|Pingram et al., 2021]] ).

In Australia, the aggregate loss of wealth due to climate-induced reductions in productivity across agriculture, manufacturing and service sectors is projected to exceed AUD$19 billion by 2030, AUD$211 billion by 2050 and AUD$4 trillion by 2100 for RCP8.5 ( [[#Steffen--2019|Steffen et al., 2019]] ) (Table 11.13). Projected impacts also cascade across national boundaries via value chains, markets, movement of humans and other organisms and geopolitics (e.g., migration from near-neighbours as a pathway for adaptation, mobile climate-sensitive diseases and changes in production and trade patterns) ( [[#Lee--2018|Lee et al., 2018]] ; [[#Nalau--2018|Nalau and Handmer, 2018]] ; [[#Schwerdtle--2018|Schwerdtle et al., 2018]] ; [[#Dellink--2019|Dellink et al., 2019]] ). The scale of impacts is projected to challenge the adaptive capacity of sectors, governments and institutions ( [[#Steffen--2019|Steffen et al., 2019]] ), including the insurability of assets and risks to lenders ( [[#Storey--2017|Storey and Noy, 2017]] ).

'''Table 11.13 |''' Economy-wide projected costs (AUD$) of climate change in Australia. (Estimates are not comparable across studies because different methods have been used. Estimates for later in the century are speculative because both impacts and adaptation are uncertain.)

{| class="wikitable"
|-
! Impact

! 2030

! 2050

! 2090

! Reference

|-
| Damage-related loss of property value in Australia

| $571 billion

| $611 billion

| $770 billion

| ( [[#Steffen--2019|Steffen et al., 2019]] )

|-
| Property damage in Australia

|
| $91 billion/year

| $117 billion/year

| ( [[#Steffen--2019|Steffen et al., 2019]] )

|-
| Loss of asset value of road infrastructure (including freeways, main roads and unsealed roads) in Australia at risk of a SLR of 1.1 m by 2100

|
| $46–60 billion

| ( [[#DCCEE--2011|DCCEE, 2011]] )

|-
| Loss of asset value of rail and tramway infrastructure in Australia at risk of a SLR of 1.1 m by 2100

|
| $4.9–6.4 billion

| ( [[#DCCEE--2011|DCCEE, 2011]] )

|-
| Loss of asset value of residential buildings in Australia at risk of a SLR of 1.1 m by 2100 (2008 replacement value)

|
| $51–72 billion

| ( [[#DCCEE--2011|DCCEE, 2011]] )

|-
| Loss of asset value of light industrial buildings (used for warehousing, manufacturing and assembly activities and services) in Australia at risk of a SLR of 1.1 m by 2100

|
| $4.2–6.7 billion

| ( [[#DCCEE--2011|DCCEE, 2011]] )

|-
| Loss of asset value of commercial buildings (used for wholesale, retail, office and transport activities) in Australia at risk of a SLR of 1.1 m by 2100 (2008 replacement value)

|
| $58–81 billion

| ( [[#DCCEE--2011|DCCEE, 2011]] )

|-
| Accumulated loss of wealth due to reduced agricultural productivity and labour productivity

| $19 billion

| $211 billion

| $4.2 trillion

| ( [[#Steffen--2019|Steffen et al., 2019]] )

|-
| Wind damage to dwellings in Cairns, Townsville, Rockhampton and south-east Queensland (assuming a 4% discount rate)

| $3.8 billion

| $9.7 billion

| $20 billion

| ( [[#Stewart--2011|Stewart and Wang, 2011]] )

|-
| Damage to Australian coastal residential buildings due to SLR (A1B scenario, 3.5°C global warming)

|
| $8 billion

| ( [[#Wang--2016|Wang et al., 2016]] )

|}

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==== 11.5.1.3 Adaptation ====

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Coordinating adaptation strategies and addressing underlying exposure and vulnerability can increase resilience to cascading, compounding and aggregate impacts ( ''high confidence'' ) (Table 11.17; 11.7.3). Systems understanding, network analysis, stress testing, spatial mapping, collaboration, information sharing and interoperability across states, sectors, agencies and value chains, as well as national-scale facilitation, can increase adaptive capacity ( [[#Espada--2015|Espada et al., 2015]] ; [[#CoA--2020e|CoA, 2020e]] ; [[#Cradock-Henry--2020b|Cradock-Henry et al., 2020b]] ; [[#Jozaei--2020|Jozaei et al., 2020]] ). Greater system diversity, modularity, redundancy, adaptability and decentralised control can reduce the risk of cascading failures and system breakdown ( [[#Sinclair--2017|Sinclair et al., 2017]] ; [[#Sellberg--2018|Sellberg et al., 2018]] ). Addressing existing vulnerabilities in systems can reduce susceptibility and improve the resilience of interdependent systems (11.7.3). Multi-level leadership, including national and sub-national policies, laws and finance can reduce and manage aggregate risks supported by the enablers in Table 11.17.

Anticipatory governance and agile decision-making can build resilience to cascading, compounding and aggregate impacts ( ''high confidence'' ) ( [[#Boston--2016|Boston, 2016]] ; [[#Deloitte--2016|Deloitte, 2016]] ; [[#Steffen--2019|Steffen et al., 2019]] ; [[#CoA--2020e|CoA, 2020e]] ; [[#CSIRO--2020|CSIRO, 2020]] ; [[#Lawrence--2020b|Lawrence et al., 2020b]] ; [[#MfE--2020c|MfE, 2020c]] ). There is uncertainty about whether standard integrated assessment models can estimate cascading and compounding impacts across systems and sectors, but systems methodologies and social network analysis hold promise ( [[#Stoerk--2018|Stoerk et al., 2018]] ; [[#Cradock-Henry--2020b|Cradock-Henry et al., 2020b]] ). Interventions at the landscape, building and individual scales can reduce the negative health effects of current and future extreme heat, if integrated in well-communicated heat action plans with robust surveillance and monitoring ( [[#Jay--2021|Jay et al., 2021]] ).

In Australia, the National Disaster Risk Reduction Framework ( [[#CoA--2018b|CoA, 2018b]] ), National Recovery and Resilience Agency and Australian Climate Service (CoA, 2021) can provide some support for adaptation across multiple sectors. New Zealand has effective partnerships across critical infrastructure through lifelines groups, but organisational silos and lack of stress testing of plans hamper coordinated decision-making during crises and for adaptation ( [[#Brown--2017|Brown et al., 2017]] ; [[#Lawrence--2020b|Lawrence et al., 2020b]] ). The New Zealand national risk assessment, national adaptation plan, forthcoming Climate Change Adaptation Act and monitoring of adaptation progress by the Climate Change Commission provide a framework for anticipating climate change risks ( [[#MfE--2020a|MfE, 2020a]] ).

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=== 11.5.2 Implications for National Economies ===

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The implications of climate change for national economies are significant ( ''high confidence'' ). The costs associated with lost productivity, disaster relief expenditure and unfunded contingent liabilities represent a major risk to financial system stability ( [[#MfE--2020a|MfE, 2020a]] ). Costs include significant and often long-term social impacts, temporary dislocation, business disruption and impacts on employment, education, community networks, health and well-being ( [[#Deloitte--2017a|Deloitte, 2017a]] ). Climate change disrupts international patterns of agricultural production and trade in ways that may be negative but that also may lead to new opportunities for agriculture ( [[#Mosnier--2014|Mosnier et al., 2014]] ; [[#Nelson--2014|Nelson et al., 2014]] ; [[#Lee--2018|Lee et al., 2018]] ). Net exports may increase following global climate shocks ( [[#Lee--2018|Lee et al., 2018]] ), but the longer-term effects on GDP are ''likely'' to be negative ( [[#Dellink--2019|Dellink et al., 2019]] ).

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==== 11.5.2.1 Observed Impacts ====

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In Australia, during 2007–2016, total economic costs from natural disasters averaged AUD$18.2 billion per year ( [[#Deloitte--2017a|Deloitte, 2017a]] ). Individual weather-related disaster costs across multiple sectors have exceeded AUD$4 billion, such as the 2009 fires in Victoria ( [[#Parliament%20of%20Victoria--2010|Parliament of Victoria, 2010]] ), the 2010–2011 floods in south-east Queensland ( [[#Deloitte--2017b|Deloitte, 2017b]] ), the 2019 floods in northern Queensland ( [[#Deloitte--2019|Deloitte, 2019]] ) and the 2019–2020 fires in southern and eastern Australia (Box 11.1).

In New Zealand, the annual cost of rural fire to the economy has been estimated at NZD$67 million, with indirect ‘costs’ potentially two to three times the direct costs ( [[#Scion--2018|Scion, 2018]] ). Insured losses from weather-related disasters cost almost NZD$1 billion during 2015–2021 ( [[#ICNZ--2021|ICNZ, 2021]] ). Floods cost the New Zealand economy at least NZD$120 million for privately insured damages between 2007 and 2017 (D. Frame et al., 2018). The 2007/2008 drought cost NZD$3.2 billion and the 2012/13 drought cost NZD$1.6 billion, of which about 20% could be attributed to anthropogenic climate change ( [[#Frame--2020|Frame et al., 2020]] ) (11.3.11).

The intangible costs of climate impacts, including death and injury, impacts on health and well-being, education and employment, community connectedness and the loss of ancestral lands, cultural sites and ecosystems ( [[#Barnett--2016|Barnett et al., 2016]] ; [[#Warner--2019|Warner et al., 2019]] ), affect multiple sectors and systems and exacerbate existing vulnerabilities. While often incommensurable, intangible costs may be far higher than the tangible costs. For example, following the Victorian fires in 2009, the tangible costs were AUD$3.1 billion while the intangible costs were AUD$3.4 billion; following the Queensland floods in 2010/2011, the tangible costs were AUD$6.7 billion while the intangible costs were AUD$7.4 billion ( [[#Deloitte--2016|Deloitte, 2016]] ).

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==== 11.5.2.2 Projected Impacts ====

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The economic long-run impact increases with higher levels of warming ( ''high confidence'' ), but there is a wide range in projections. Conservative estimates for the long-run impacts of a 1°C, 2°C or 3°C global warming (relative to 1986–2005) on Australian GDP are −0.3, −0.6 and −1.1%/year, respectively, while for New Zealand the estimates are −0.1, −0.4 and −0.8%/year respectively ( [[#Kompas--2018|Kompas et al., 2018]] ). More detailed modelling indicates a loss in Australia’s GDP of 6% by 2070 for 3°C global warming, while a 2.6% GDP rise by 2070 is possible for 1.5°C global warming ( [[#Deloitte--2020|Deloitte, 2020]] ). The potential for much more severe effects on GDP is shown in recent estimates, which attempt to account for the increased severity of uncertain effects (e.g., up to 18.5% reduction in Australia’s GDP by mid-century) ( [[#Swiss%20Re--2021|Swiss Re, 2021]] ).

In Australia, the total annual cost of damage due to floods, coastal inundation, forest fires, subsidence and wind (excluding cyclones) is estimated to increase 55% between 2020 and 2100 for RCP8.5 ( [[#Mallon--2019|Mallon et al., 2019]] ). National damage costs and impacts on asset values could be significant (Table 11.13). The macroeconomic shocks induced from climate change, including reduced agricultural yields, damage to property and infrastructure and commodity price increases, could lead to significant market corrections and potential financial instability ( [[#Steffen--2019|Steffen et al., 2019]] ). Under a ‘slow decline’ scenario by 2060 where Australia fails to adequately address climate change and sustainability challenges, GDP is projected to grow at 0.7% less per year and real wages would be 50% lower than under an ‘outlook scenario’ where Australia meets climate change and sustainability challenges ( [[#CSIRO--2019|CSIRO, 2019]] ).

In New Zealand, the value of buildings exposed to coastal inundation could increase by NZD$2.55 billion for every 0.1-m increment in sea level, that is, NZD$25.5 billion for a 1.0-m sea level rise (SLR) ( [[#Paulik--2020|Paulik et al., 2020]] ). Greater understanding is required of the distributional impacts, the rate of change of costs over time and the economic implications of delayed action ( [[#Warner--2020|Warner et al., 2020]] ).

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==== 11.5.2.3 Adaptation ====

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Investments in mitigation and adaptation can help reduce or prevent economic losses now and in the coming decades ( [[#IPCC--2018|IPCC, 2018]] ; [[#Steffen--2019|Steffen et al., 2019]] ); however, the costs and benefits of mitigation and adaptation are not well understood in the region ( ''high confidence'' ) ( [[#CSIRO--2019|CSIRO, 2019]] ; [[#MfE--2020a|MfE, 2020a]] ).

In New Zealand, the emphasis has been on rebuilding after climate disasters, rather than anticipatory adaptation ( [[#Boston--2018|Boston and Lawrence, 2018]] ). Australia is similarly focused on disaster response and recovery, even though investment in disaster resilience can provide a cost:benefit ratio of 1:2 to 1:11 through reduced post-disaster recovery and reconstruction ( [[#GCA--2019|GCA, 2019]] ). Recent Australian and state government spending on direct recovery from disasters was around AUD$2.75 billion per year, compared to funding for natural disaster resilience of approximately AUD$0.1 billion per year ( [[#Deloitte--2017b|Deloitte, 2017b]] ). The Australian government is supporting most of the 80 recommendations from the Royal Commission into National Natural Disaster Arrangements, including establishing a disaster advisory body and a resilience and recovery agency ( [[#CoA--2020e|CoA, 2020e]] ; [[#CoA--2020b|CoA, 2020b]] ). Australia and New Zealand provide humanitarian and disaster assistance across the Pacific, which is increasingly focused on climate adaptation and the SDGs ( [[#Brolan--2019|Brolan et al., 2019]] ) as cyclones and floods become amplified by climate change ( [[#Fletcher--2013|Fletcher et al., 2013]] ) (Table 11.3). Climate change may increase current migration flows to and impacts on diaspora in Australia and New Zealand from near-neighbour island nations as they become increasingly stressed by rising seas, higher temperatures, more droughts and stronger storms ( [[#Nalau--2018|Nalau and Handmer, 2018]] ).

Delaying adaptation to climate risks may result in higher overall costs in future when adaptation is more urgent and impacts more extreme ( ''medium confidence'' ) ( [[#Boston--2018|Boston and Lawrence, 2018]] ; [[#IPCC--2018|IPCC, 2018]] ). Estimates of the magnitude of adaptation costs and benefits in the region are localised and sectoral (e.g., ( [[#Thamo--2017|Thamo et al., 2017]] ) or regionally aggregated ( [[#Joshi--2016|Joshi et al., 2016]] ). Adaptation costs are expected to increase markedly for higher RCPs, for example, a tripling of expected costs between RCP2.6 and RCP8.5 for sea level rise (SLR) protection in Australia ( [[#Ware--2020|Ware et al., 2020]] ). Existing governance arrangements for funding adaptation are inadequate for the scope and scale of climate change impacts anticipated; dedicated funding mechanisms that can be sustained over generations can enable more timely adaptation ( [[#Boston--2018|Boston and Lawrence, 2018]] ).

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