This study assessed the economics of climate change in Kenya. It
1. The impacts and economics costs of climate change;
2. The costs of adaptation; and
3. The potential for low carbon growth.
The study advanced a number of approaches to investigate these areas,
using aggregated analysis (top-down), sector assessment (bottom-up) and
The key messages are:
The economic costs of climate change
- Existing climate variability has significant economic costs in Kenya.
Periodic floods and droughts (extremes) cause major macro-economic
costs and reductions in economic growth.
- Future climate change will lead to additional and potentially very
large economic costs. These are uncertain. However, aggregate models
indicate additional net economic costs (on top of existing climate
variability) could be equivalent to a loss of almost 3% of GDP each
year by 2030 in Kenya.
- Costs include potential threats to coastal zones (sea-level rise),
health burdens, energy demand, infrastructure, water resources,
agriculture and loss of ecosystem services. The study has addressed
the potential impacts and economic costs in these sectors.
- These highlight the importance of preparing for future climate change.
While it is difficult to predict effects with confidence, there is a
need to plan robust strategies to prepare for the future, rather than
using uncertainty as a reason for inaction.
- Adaptation can reduce the economic costs of climate change but it has
a cost. The costs of adaptation are still emerging. A number of
categories of adaptation have been identified that relate to the
balance between development and climate change.
- An initial estimate of immediate needs for addressing current climate
as well as preparing for future climate change for Kenya is $500
million / year (for 2012). The cost of adaptation by 2030 will
increase: an upper estimate of the cost is likely to be in the range
of $1 to 2 billion/year.
- The study has also prioritised early adaptation across the sectors.
These studies demonstrate that adaptation has potentially very large
benefits in reducing present and future damages. However, while
adaptation reduces damages, it does not remove them entirely. Residual
impacts in Kenya, particularly for some regions and groups are
expected and need to be managed.
Low carbon growth
- The analysis has considered future emissions for Kenya, consistent
with planned development. Emissions of greenhouse gases (GHG) could
double between 2005 and 2030. Moreover, plans across the economy could
‘lock-in’ Kenya into a higher emission pathway.
- The study has investigated a low carbon alternative pathway. This
finds that a large number of ‘no regrets’ options that would enhance
economic growth, as well as allowing further access to international
carbon credits. They also have economic benefits from greater energy
security and diversity, reduced air pollution, reduced environmental
- The study estimates energy related emission savings of 22% could be
achieved by 2020, relative to the baseline, even for a small selection
of options. Over 80% of these options can be realized at net negative
cost. When carbon credits are included, this amount is likely to be
- Overall, because of its location, availability of resources and
socio-economic conditions, the study concludes that there are
significant economic benefits for Kenya in following a low carbon
development path, as well as large environmental and social benefits.
- The study has outlined a number of recommendations and future
Stockholm Environment Institute. The Economics of Climate Change in Kenya: Final Report submitted in advance of COP15. Stockholm Environment Institute, Stockholm, Sweden (2009) 65 pp.
The Economics of Climate Change in Kenya: Final Report submitted in advance of COP15.