Due to climate change, Finland is warming on a rate that is double compared to the world average. Climate change already affects all Finns and all sectors of the economy, but the cost of climate risks is not evenly distributed.
Sitra, the Finnish Innovation Fund, assigned Gaia to calculate the cost of climate risks to Finland as well as to study to whom the costs are particularly high. There is still very limited information on the costs of climate risks to Finland. To-date, more research has focused on natural sciences, and the economic impact assessment has been mainly qualitative.
Economic and scientific research on this subject should be brought out of their silos and discussed together. Climate change will have both negative and positive economic impacts on Finland. Hence, the net impact should be further explored. In reviewing the costs of climate change, it is also important to take into account indirect effects and cross-border risk, as Finland is a small and open economy where the importance of exports and imports is emphasized.
Our study looked at costs through eight examples. These include insect and storm damage in forests, the effects of extreme weather phenomena on the electricity grid and roads, climate risks in arable crops, and health hazards caused by climate change.
The selected examples are tangible for the part of the already realized costs of climate change, which are increasing as a result of rising average temperatures and extreme weather conditions.
Climate warming can also trigger mechanisms that accelerate the warming such as melting of the permafrost and the release of the methane stored in it, which can lead to uncontrolled warming. These mechanisms can be activated already in the case of average warming of two degrees. If climate change can not be controlled quickly, costs may be unpredictably high.
Some of the costs of climate change will be directly paid by individual citizens, while others will be covered by the common tax burden.
For example, the effects of weather phenomena on crops will be beared by the farmers. Forest owners or forest industry will have to deal with the damage caused by insects and storms. The warming will take its toll more heavily on the elderly and people suffering from underlying diseases, and women have more symptoms of increasing winter darkness than men.
All Finns, however, need to join in and cut down their emissions. Everyone should also look at ways to adapt to climate change. Risk mitigation is needed quickly, and the silver lining is that it can also help to identify potential opportunities of climate change.
We could be able to reduce the cost of climate change, but not without a war plan. Future cost savings can not be achieved without investing in climate change mitigation and adaptation today.