World Bank warns annual climate adaptation bill to hit $100bn

The annual cost of adapting to climate change in developing economies will reach between $75bn and $100bn over the next 40 years, according to preliminary findings from a major new study by the World Bank.

Funded by the governments of the Netherlands, Switzerland and the UK, the Economics of Adaptation to Climate Change (EACC) report uses new economic models to estimate the likely cost to the developing world of adapting to climate change.

The draft version of the report, released yesterday, maps out a "wet" and a "dry" climate change scenario, and predicts that the cost of adapting infrastructure to cope with increased climate risks will average out at $75bn a year under the dryer scenario and $100bn under the wetter scenario.

Sergio Margulis, lead environmental economist at the World Bank, argued that if anything the estimates are conservative. "The EACC study provides a range of estimates for a world in which decision makers have perfect foresight," he said. "In the real world where decision makers hedge against a range of outcomes, the actual expenditures are potentially higher than this."

The new research is likely to crank up pressure on international negotiators meeting in Bangkok this week to continue work to agree a successor to the Kyoto climate change treaty to agree to increased funding for adaptation measures in developing economies.

"The World Bank study makes plain that taking action in favour of adaptation now can result in future savings and reduce unacceptable risks," said Bert Koenders, Dutch minister for development co-operation.

"At this point, the costs this will entail can still be borne by the international community, to judge by the GDPs of rich countries, but for poor countries they are unacceptably high. More than ever, mitigation, adaptation and development co-operation are needed to make the poor less vulnerable to climate change."

However, to date the only concrete proposal for increasing climate change funding for the developing world is British prime minister Gordon Brown's plan for rich nations to provide $100bn a year of investment from 2020 – a figure which, according to the World Bank, will prove too small if it has to cover both emission reduction and climate adaptation measures.

The study came on the same day as a separate report produced by the International Food Policy Research Institute (IFPRI) for the World Bank and Asian Development Bank warning that climate change will lead to severe food shortages by 2050 unless investment in agriculture is significantly increased.

The report warns that 25 million more children will face malnutrition by the middle of the century as falling crop yields lead to shortages and price spikes.

Responding to the study, UN Secretary General Ban Ki-Moon said there was an urgent need for rich nations to increase investment in developing more resistant strains of crops and improving agricultural techniques in developing economies.

The report modelled the likely impact of climate change and predicted that global wheat yields could fall by 30 per cent over the coming decades, while prices of both wheat and rice could more than double by 2050.