Climate costs Africa 15pc GDP cut

November 23, 2009

, NAIROBI, Kenya, Nov 23 – African economies have so far lost up to 15 percent of their Gross Domestic Product (GDP) due to the effects of climate change, a study commissioned by Barclays has shown.

The Met Office report, which found out that the African economy is particularly structurally vulnerable to climate factors, warns that this figure could multiply over the coming years.

"Climate change is already happening, and Africa is on the front line. The worst effects can still be avoided if greenhouse gas emissions are reduced soon, but some further climate change is already locked in,” warned Head of Climate Impacts at the Met Office Dr Richard Betts.

Most models agree on a rise in temperature but precipitation projections are less certain.

The report proposed that improvements in understanding the science of African climate are needed, to provide more comprehensive projections that can inform commercial decision-making and risk management.

“Forward planning to adapt to the shifting patterns of climate will help to minimise the impact by building resilience in communities and businesses alike," Mr Betts advises.
The report analyses three economies: Kenya, Ghana and South Africa, all of which were found to be exposed to future climate impacts on water resources, sea level rise, agriculture, energy and urban populations.

In Kenya risks to tea production, wildlife and coastal tourism are of key concern. Ghana has large and potentially vulnerable cocoa and forestry sectors and relies on hydropower for around 66 percent of electricity, which can impact its mining sector.

Despite being the most diversified economy on the continent, the study revealed that South Africa still faces risks to coastal populations and water shortages impacting industry, particularly mining and coal-fired power generation.

The report further showed that with the exception of South Africa, most economies are reliant on rain-fed agriculture and tourism, which are some of the most exposed sectors to climate changes.

However, broader economy-wide impacts on these sectors may arise.

“For example, the Kenyan drought in 1998-1999 caused an overall loss amounting to 16 percent of GDP, but around 85 percent of this was incurred through foregone hydropower and falls in industrial production and only 15 percent due to agriculture,” the report pointed out.

Mr Betts said the impact of climate factors on Africa will be exacerbated by climate change but the detailed impacts at a country level are still unclear.

It therefore calls for concerted efforts from governments and businesses to manage the continent’s current climate exposure and build resilience to this challenge.

“This research will help improve understanding of today’s climate risks and build resilience to tomorrow’s potential changes, both of which will help secure Africa’s future growth,” said the Chairman of Barclays Marcus Agius.

Mr Agius added that policy initiatives to increase economic development would help build resilience to climate change as economies become more diversified with increased capacity to invest in risk management and adapt to climate change.

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