Scotland may need between £7.8 billion and £14.2 billion of investment over the next 15 years to adapt to the impacts of climate change, according to new research led by the University of Strathclyde.

Published by ClimateXChange, Scotland’s centre of expertise on climate change, and supported by Paul Watkiss Associates, the study provides the first comprehensive estimate of investment needs across five key sectors. It offers an evidence base to inform future policy and infrastructure decisions and estimates Scotland’s climate adaptation investment needs up to 2040 across agriculture, communities (flooding), natural environment, transport and water.

The analysis suggests that current investment in agriculture is broadly aligned with estimated adaptation needs, while investment in flood resilience, transport and nature restoration is likely to fall short. Flooding alone already costs Scotland an estimated £500 million per year according to figures from the Scottish Environment Protection Agency.

Significant costs

The research team says that failing to invest in adaptation carries significant economic costs and estimate that Scotland may need to invest the equivalent of £566 million to £1 billion each year to build resilience to increasing climate risks in the five sectors. Scotland's overall adaptation investment needs are likely to be higher.

Lead author Louise Brett, who was with University of Strathclyde’s Department of Civil & Environmental Engineering and a ClimateXChange Fellow when the research was carried out, said: “Preparing Scotland for climate change will require significant long-term investment, but our research shows that acting early is likely to cost less than responding after climate impacts occur.

The cost of adaptation may be substantial, but the costs of inaction are likely to be greater. Our report reinforces a crucial message: investing in adaptation is more beneficial and cost-effective than failing to adapt.

The report also highlights the wider economic consequences of climate change. Estimates suggest it could reduce GDP by 0.3-0.4% a year in the 2030s, rising to 1.2-1.6% by the 2050s and 1.6-3.3% by the 2070s. These estimates may also understate the potential economic impacts, as they do not fully capture the consequences of low-probability, high-impact or catastrophic climate events, which could result in substantially greater losses.

Private sector

The report also explored who currently pays for adaptation in the sectors, and the potential to share this more fairly across public sector, businesses and households, and innovative methods to boost private sector participation.

Kit England, Senior Adaptation Specialist at Paul Watkiss Associates and and Visiting Research Fellow at London School of Economics, said: “As costs of adaptation rise, we will need a greater focus on who pays and why. This report shows that the costs are already being shared across society, and that there is the potential to use innovative financial arrangements from global best practice to better share the responsibility and costs of addressing these risks across public sector, households and businesses."

This work is intended to support the Scottish Government in building an evidence base ahead of the fourth Scottish National Adaptation Plan, which is published every five years, aligned with the latest UK Climate Change Risk Assessment (CCRA).

Evidence gap

Professor Christopher White, Head of the Centre for Water, Environment, Sustainability and Public Health at the University of Strathclyde, said: "Without a clearer picture of adaptation investment needs, it is difficult to plan strategically, allocate budgets effectively or make the case for mobilising private alongside public investment. Although estimating future adaptation needs involves considerable uncertainty, this report provides an important starting point for closing that evidence gap."

The research was also supported by UK Research & Innovation through the ATTENUATE project.