Responsibilities and costs of adaptation

Responsibility for steering of adaptation measures requires co-operation by different actors

Implementation of adaptation to climate change requires co-operation between various sectors and levels of administration, both nationally and internationally. Adaptation policy should be mainstreamed and integrated to cover the public administration in full, and co-operation with the private sector and third sector actors should also be developed [1]. Land use, for instance, should be reviewed as a cross-sectoral issue, into which adaptation needs have been integrated. Resources for implementing the required adaptation measures in the short and long term should be allocated at the same time.

Administrative-judicial steering of adaptation is still largely implemented by the central government. On the other hand, it vests the principal responsibility for implementation of adaptation measures on the regional and local level. Hence the present challenge for the municipal planning system is to examine whether it is able to respond to the consequences of climate change, and implement the required measures. Without exception, adaptation to climate change requires local planning solutions and local co-operation. Structural basic prerequisites for adaptation are already in place, if the willingness to utilise them exists [2].

Practical adaptation work consists of small-scale measures that can be implemented by the public administration, households and businesses alike. Climate change affects the field of activity of municipalities extensively, in particular environmental and technical services [3].

Adaptation measures are planned and implemented locally

The variation of climatic conditions and weather has always controlled human activity. Therefore, adaptation measures have in a way been carried out for long time, even if not labelled as such. The long-term efforts to solve riverside flooding problems are a good example of this (see e.g. the war against flooding of River Kyrönjoki [4]). The gradual change in climatic conditions, and extreme weather conditions becoming more common requires, however, an increasing attention by local actors, in particular, to climate issues. Changing climatic conditions and more common extreme phenomena should be taken into account in planning of basic municipal infrastructure (transport, telecommunications and energy networks, and water management systems) so as to secure their operational capacity even in exceptional conditions.

The impacts of climate change can be taken into account quite precisely in detailed planning, such as partial local master plans or local detailed plans. According to a VTT study, from the viewpoint of adaptation land-use planning should, among others, favour low and compact structures, avoid direct street spaces parallel with prevailing wind directions, and protect yards from wind with the help of building masses [5].

Knowledge of and attention to local conditions are emphasised in design and land-use planning in particular. The local microclimate, geography and soil quality define the required adaptation measures. For instance, charting of flood risk areas, planning of storm water infiltration and different block solutions can be used in preparing for the impacts of climate change and creating, at the same time, long-term pleasant residential areas [5].

Adaptation strategy clarifies challenges and responsibilities

Awareness of climate risks, and their inclusion in decisions, is the prerequisite for adaptation [6], [6] [7]. Adaptation strategies offer a method of identifying vulnerabilities and seeking concrete adaptation measures suitable for the operating environment of each municipality. Above all, however, they constitute means for sharing responsibility for adaptation measures. Many urban regions in Finland have realised the need for adaptation strategies in recent years. In addition, many cities have prepared strategies for mitigating climate change, many of which include at least preliminary scoping of adaptation needs. The principles of sustainable development form an essential starting point for strategic planning adapting to gradual change, i.e.adaptive management.

At best, the adaptation strategies and the methods recognised in them help in constructing the ability to adapt by producing information and creating social structures in support of administration. The challenge for strategies is production of concrete adaptation measures that help in reducing vulnerability to climate risks and exploiting the possibilities climate change entails [8]. Adaptation needs and requirements will not be implemented in practice on their own accord. Instead, they require new kinds of requirements from planners, too. Initiation of strategic work, and its implementation in particular, require the support of the municipal management as well. In practice, once adaptation needs are identified, it is easier to identify adaptation options for them. For instance, the impacts of climate change are easier to take into account already at the planning stage of construction projects when several options are still available.

Costs of adaptation measures hard to assess

The costs of future impacts of climate change and those of adaptation measures involve a number of uncertainties. According to the final report of the FINADAPT project, preliminary estimates on the overall economic impacts of climate change in Finland are slightly positive [9], [10]. In the longer term, however, adverse impacts clearly exceed benefits. Assessments of economic impacts also change clearly if the negative impacts of extreme climatic phenomena, and the volatility of markets are taken into account in the calculations [10].

Taking no action will also incur costs in the long term. The 2006 report by Sir Nicholas Stern on the economics of climate change stated that early action in preparing for climate change will be significantly cheaper than the consequences of uncontrolled change [11]. Uncertainty regarding costs and benefits should not prevent planning of adaptation. The earlier climate change is taken into account in decision-making, the easier and more advantageous planning of preparation will be [8]. Therefore, in order to curb costs, it is essential to prepare for the need of adaptation measures in advance. Planned adaptation, based on considered decision-making and information on changed or changing conditions, should form the starting point for decision-making and resource allocation [10].

The shorter repayment period of adaptation measures in comparison with mitigation measures makes decision-making easier. Adaptation often responds to problems that may cause high costs on the local level (e.g. flood control) already at present. On the other hand, the benefits of adaptation measures are targeted directly at certain areas, whereas mitigation measures are targeted globally [7]. For instance, climate-conscious community planning at best lowers energy consumption, facilitates real estate management and decreases the need for repairs, which lowers residential costs [5].

The effects of climate change are intensely reflected on sectors dependent on climatic conditions, such as agriculture, forestry and the fishing industry, the energy industry, the tourism industry, health care industry and financing and insurance. From the viewpoint of municipalities, it is most essential to prepare for maintaining the operating security of basic infrastructure. The most significant consequences of climate change for municipalities will be caused by floods and flood-related community protection needs, and the rise in groundwater levels (see e.g. , [3]),[12]).

Who will shoulder the costs?

The public costs of preparing for climate change mainly comprise strengthening, repairing or protecting infrastructure (for instance, flood control structures, elevation of roads or repairing of flood damages). The public sector is also responsible for the functionality of emergency response systems. This requires both economic and administrative resources from the public sector. Private actors, too, should commit themselves to reducing their vulnerability [6].

However, at present it is often difficult to define the party that should cover the costs of preparation. For instance, flood control is not actually prescribed as the responsibility of the central government or municipalities. Instead, responsibility for property has been transferred to property owners. The use and management of water resources falls within the remit of Centres for Economic Development, Transport and the Environment. It is also considered to cover flood risk management. In the act under preparation on flood risk management, the Centres will be made responsible also for flood protection and promoting measures that enhance flood risk management. At present, the State supports flood control measures under a Government decree on rural activities. Municipalities are responsible for rescue services [3]. 

The public sector must find new kinds of operating methods to cover adaptation costs. One solution proposed for covering additional costs is various public-private partnerships that would help the public sector to assist in overcoming operational obstacles, promoting performance and speeding up investments [6]. The inherent risk is that the costs mentioned will largely remain the responsibility of municipalities. Thus the creation of a well-functioning system of insuring and financing flood damage is vital, as is clarification of preparation and compensation responsibilities [3].

Risk management through insurance

At best, the insurance sector can assume a role that promotes anticipation of climate risks and adaptation, because it is in the interest of the sector to both enhance awareness of risks among the insured and to analyse the characteristics, impacts and probability of risks. The insurance sector plays a significant role in terms of costs incurred by climate change. From the viewpoint of insurance activity, climate change increases risks, such as damage caused by extreme weather phenomena or rising sea levels. In practical terms, increasing risks also result in more expensive insurance [13].

At present, the most active debate on the role of the insurance sector, and climate change, is conducted on flooding of waterways. Today, insurance companies compensate damage to real estate caused by for instance storm damage, torrential rain or flooding of the sea using home insurance policies, but damage caused by flooding of lakes and rivers, are for the time being compensated by the state using budget funds. Businesses, in turn, conclude individual insurance contracts and the state does not compensate damage caused to enterprises [13]. 

Pressures for changing the current system are caused by the EU above all, because the current model based on direct subsidies from the state budget does not comply with the Union's principles. Transferring the insurance of risks caused by flooding of waterways to the private insurance sector would also standardise compensation practices and probably shorten the handling periods of claims for compensation, as handling would be transferred from the central government to private insurance companies. In this case, citizens, too, would be able to benefit from the operations of insurance companies' professional damage handling organisations, when the relative amount of compensation, and the payment schedule, would be known in advance [13].