1.0 Introduction 2.0 A Climate Change Scenario 3.0 Economic Impact on Central Valley Agriculture 4.0 Economic Impact on Urban Users in Southern California 5.0 Floods 6.0 Concluding Observations 7.0 ReferencesTHE ECONOMIC COST OF CLIMATE CHANGE IMPACT ON CALIFORNIA WATER: A SCENARIO ANALYSIS DRAFT A Report From: California Climate Change Center Prepared By: Michael Hanemann, Larry Dale, Sebastian Vicuña, Damian Bickett, and Caitlin Dyckman California Climate Center at UC Berkeley Goldman School of Public Policy University of California, Berkeley WHITE PAPER DISCLAIMER This report was prepared as the result of work sponsored by the California Energy Commission (Energy Commission) and the California Environmental Protection Agency (Cal/EPA). It does not necessarily represent the views of the Energy Commission, Cal/EPA, their employees, or the State of California. The Energy Commission, Cal/EPA, the State of California, their employees, contractors, and subcontractors make no warrant, express or implied, and assume no legal liability for the information in this report; nor does any party represent that the uses of this information will not infringe upon privately owned rights. This report has not been approved or disapproved by the California Energy Commission or Cal/EPA, nor has the California Energy Commission or Cal/EPA passed upon the accuracy or adequacy of the information in this report. Arnold Schwarzenegger, Governor January 2006 CEC-500-2006-003-SDAcknowledgements iPreface The Public Interest Energy Research (PIER) Program supports public interest energy research and development that will help improve the quality of life in California by bringing environmentally safe, affordable, and reliable energy services and products to the marketplace. The PIER Program, managed by the California Energy Commission (Energy Commission), annually awards up to $62 million to conduct the most promising public interest energy research by partnering with Research, Development, and Demonstration (RD&D) organizations, including individuals, businesses, utilities, and public or private research institutions. PIER funding efforts are focused on the following RD&D program areas: • Buildings End-Use Energy Efficiency • Energy-Related Environmental Research • Energy Systems Integration • Environmentally Preferred Advanced Generation • Industrial/Agricultural/Water End-Use Energy Efficiency • Renewable Energy Technologies The California Climate Change Center (CCCC) is sponsored by the PIER program and coordinated by its Energy-Related Environmental Research area. The Center is managed by the California Energy Commission, Scripps Institution of Oceanography at the University of California at San Diego, and the University of California at Berkeley. The Scripps Institution of Oceanography conducts and administers research on climate change detection, analysis, and modeling; and the University of California at Berkeley conducts and administers research on economic analyses and policy issues. The Center also supports the Global Climate Change Grant Program, which offers competitive solicitations for climate research. The California Climate Change Center Report Series details ongoing Center-sponsored research. As interim project results, these reports receive minimal editing, and the information contained in these reports may change; authors should be contacted for the most recent project results. By providing ready access to this timely research, the Center seeks to inform the public and expand dissemination of climate change information; thereby leveraging collaborative efforts and increasing the benefits of this research to California’s citizens, environment, and economy. For more information on the PIER Program, please visit the Energy Commission’s website www.energy.ca.gov/pier/ or contact the Energy Commission at (916) 654-5164. iiTable of Contents Preface ................................................................................................................................................ii 1.0 Introduction..........................................................................................................................1 2.0 A Climate Change Scenario................................................................................................1 3.0 Economic Impact on Central Valley Agriculture ............................................................4 4.0 Economic Impact on Urban Users in Southern California.............................................8 5.0 Floods ....................................................................................................................................18 6.0 Concluding Observations ...................................................................................................18 7.0 References .............................................................................................................................20 iii1.0 Introduction The report by Cayan et al. (2005) presents several scenarios of future climate change in California and traces out the resulting impacts on agriculture, forestry, water, fire, coastal resources, and public health over the course of this century. This report focuses on the impacts on water supply in California and attempts to provide a rough estimate of the economic consequences of several of these impacts. The focus is on a specific emission scenario and a specific global climate model—the A2 emission scenario modeled using the Geophysical Fluid Dynamics Laboratory (GFDL) global climate model. The economic analysis focuses specifically on the consequences of climate change resulting from this emission scenario in the last three decades of the century. Future work will fill out this picture, conducting sensitivity analyses of the assumptions used here and examining other emission scenarios, other global climate models, and other parts of the century. However, this report constructs an analytic framework which will form a basis for this future work. The report is organized as follows: Section 2 provides a review of the hydrologic consequences of the emission scenario and global climate model selected for analysis; Section 3 examines the economic impact on agricultural water users in the Central Valley; and Section 4 considers the economic impact on urban water users in Southern California. Section 5 touches briefly on floods. Section