House of Commons - Adapting to Climate Change - Environmental Audit Committee

Adapting to Climate Change - Environmental Audit Committee Contents

3 The risks to government objectives and its capacity to respond

47. Adapting to climate change is a cross-government issue that requires action across a broad range of policy areas, including: business and the economy; infrastructure; agriculture, food security and the natural environment; homes, buildings and communities; flooding and coastal erosion.[112] The Adapting to Climate Change Programme works with government departments to help them embed adaptation into their work and polices, through the sharing of best practice, developing cross-departmental understanding and monitoring of progress.[113]

The impact of climate change on departments' objectives and programmes

48. Assessing the risks from climate change to departmental objectives and programmes is not straightforward as projected changes are uncertain, will occur over long timescales and could have a number of direct and indirect consequences.[114] In response to a 2009 National Audit Office survey for this Committee, 10 departments reported they had undertaken a systematic assessment of the risks of climate change to some of their objectives, and the other six had undertaken a limited assessment for some or all of their objectives. Eleven of the 16 departments identified that climate change risks are potentially significant to some of their policy objectives, whereas Defra considered climate change risks to be a significant threat to all of its objectives.[115] The Tyndall Centre told us that in addition to identifying risks to their own objectives, departments should consider the extent to which their objectives and programmes are contributing to greater vulnerability in their own or in other sectors.[116] Water UK argued that policy makers, regulators and others needed to recognise the links between adaptation and mitigation and to promote 'win win' policies. For example, cutting water consumption will reduce the energy needed to abstract and provide water, and increase the volume of water that is available for the natural environment.[117]A 2010 report by the Government Office for Science argued for the development of a coherent climate change adaptation and mitigation strategy for the use of land in the UK.[118]

49. Vulnerability to a changing climate is specific to location and specific to activity.[119] UKCIP told us that high level departmental reviews typically yield generic risks and a "[…] more detailed assessment further down the organisation will yield a richer understanding that will invite consideration of practical adaptation responses".[120] Ofwat observed that:

121

50. Natural England warned that assessing the costs and benefits of adaptation solely within individual departments exposes the Government to the risks created by perverse incentives and could result in unintended consequences.[122] Defra expect the Departmental Adaptation Plans, due to be published shortly, to set out the "[…] practical steps each government department will take over the next two years to safeguard its policy objectives and programmes, and to improve leadership and delivery of adaptation by making relevant changes to operational systems and processes".[123] The plans should also set out how departments will work collaboratively, including with stakeholders, to address key barriers to adaptation.[124] Defra has encouraged departments to combine their adaptation plans with the Carbon Reduction Delivery Plans (required by the Department of Energy and Climate Change) and prepare a single Climate Change Plan that addresses connections and interdependencies between mitigation and adaptation actions.[125]

51. Departmental Adaptation Plans should be a key stepping stone for departments in taking responsibility for their own climate risks and delivering policy, programmes and projects that are adapted to future climates.[126] The Environment Agency argued that "[…] scrutiny of these plans is essential and will help establish what progress is being made".[127] The Adaptation Sub-Committee will review a sample of the plans prepared in 2010.[128] The Sustainable Development Commission may wish to play a role in scrutinising the plans.[129]

52. Departments need to improve their understanding of how climate change will affect their policy objectives and the ways they deliver those objectives. Departments also need to consider whether their actions are increasing climate change vulnerability. We welcome the Government's decision to require each department to prepare Departmental Adaptation Plans. The plans could improve the delivery of, and accountability for, adaptation and, raise general awareness of climate change risks. The plans should encourage more cross-departmental working within government, and they should aid the linking of the adaptation and mitigation agendas. But if departments are to understand climate change risks better, a bottom-up approach to risk assessment is needed. Departments should involve staff from all parts of their organisation and a wide range of stakeholders, including their delivery partners, in assessing risks and identifying potential responses. Departments need to decide which risks to accept, and which ones to prioritise for action. Departments also need to examine whether actions taken for very good reasons make adaptation to climate change harder: there are inevitably conflicts in policy and trade-offs have to be made. The Government must be clear about how the different considerations are weighed and how the trade-offs have been made.

53. Internal challenge, peer review, and external scrutiny, of future Departmental Adaptation Plans can play a key role in maintaining current momentum and reducing the risk that adaptation becomes marginalised. Departments must set aside adequate resources to support the production and review of Departmental Adaptation Plans in future years. The Government should use the Plans to:

get feedback on adaptation from stakeholders, civil society and the general public;
focus more on outcomes and less on process; and
encourage formal external scrutiny of progress.

Our successors may wish to scrutinise the departments' plans.

Departments' capacity to manage risks arising from climate change

54. In 2009 the NAO found that departments were at very different stages of developing their capacity to manage risks. Some departments reported they were implementing climate change risk management strategies; others were at a much earlier stage in the process.[130] The Environment Agency's assessment was that preparation for climate change "[…] is more advanced in some parts of Whitehall than others".[131] Embedding adaptation into mainstream business processes requires management commitment and time. The Environment Agency said it first built an allowance for the impact of climate change into its Flood Risk Appraisal Guidance in 1999, developed its first formal adaptation strategy in 2005, and continued to take action to embed adaptation into its business.[132] Since 2007, the GLA has had a climate change duty that requires the Mayor and the London Assembly to mainstream climate change adaptation across their plans and strategies.[133] We were told by the Mayoral Adviser on the Environment that the climate change duty has helped convince all parts of the GLA that they must consider environmental issues.[134]

55. Departments can help those delivering public services by establishing a clear and, where possible, quantified view of the risks to specific programmes. For flooding, Defra and the Environment Agency have quantified their risk appetite. Defra has "[…] used a rule that defending against a level of river flow 20% greater than 'normal' is necessary".[135] The Environment Agency's long-term investment strategy is based on the number of homes that are at risk of sea and river flooding from a 1 in 75 year event.[136] UKCIP contrasted these examples of good practice with the heat wave plan, pointing out that the plan lacks a political statement about the acceptable level of risk of deaths from heat waves. It is therefore difficult for decision makers at all levels of government to determine how much adaptation is required.[137]

56. All departments need to consider climate change risks as part of the management of their objectives and programmes. Capacity to manage climate change risks varies across Whitehall. We believe that the Government's current approach of assisting and encouraging departments to take action on adaptation, for example by introducing Departmental Adaptation Plans, is right. But the Government must look at other ways of changing behaviour if adaptation is not incorporated into mainstream business processes and instead becomes a box-ticking exercise. Options would include raising the authority and seniority of the Adapting to Climate Change Programme and its Board by moving them to the Cabinet Office. The Cabinet Office already has the related responsibility for coordinating government-wide work to prepare for civil emergencies. A duty could also be placed on departments requiring them to mainstream adaptation across their planning and management procedures.

57. For major programmes susceptible to climate change risks, departments should develop and communicate a clear, and where possible quantified, view of the particular level of risk they are willing to accept. This will help those managing public services to decide what type and level of adaptation action is necessary. For some major programmes, departments may be able to wait for the results of the Climate Change Risk Assessment if it is going to provide information that will help them assess and quantify risks. However, there are programmes, such as those including new buildings, where departments need to communicate their acceptance of risk now. For lower priority programmes, or those less susceptible to climate change risks, departments may judge that there is no need for a central steer on risk, and those responsible for delivering public services are best placed to decide what risks to accept. It is important that public bodies are clear about the boundaries of their decisions on adaptation. It is also important that elected members at all levels of government are engaged in decisions on adaptation.

58. Opportunities will arise from climate change, for example low levels of warming may increase the productivity of certain crops and commercially grown trees.[138] In responding to the 2009 NAO survey, 11 departments did not identify any potential opportunities from climate change, and the remaining five identified a total of six potential opportunities. In total the 16 departments identified over 50 threats.[139] Government departments have not given adequate attention to the opportunities that may arise from climate change. Departments need to take a balanced view of the impacts of climate change. The Government must encourage departments to work with their partners to identify and exploit opportunities.

Appraising adaptation actions and the Green Book

59. Potential adaptation actions need to be appraised using rules set down in HM Treasury's The Green Book: Policy Appraisal and Evaluation in Central Government. The rules require departments to examine the lifetime costs and benefits of proposed projects, and consider whether there are better ways of achieving objectives or using resources.[140] In 2009, HM Treasury and Defra issued a supplement to the Green Book addressing adaptation to climate change.[141] Natural England told us they were pleased with the supplementary guidance as it addresses the important principles of sustainable development and, by implication, sustainable adaptation. Their one criticism of the guidance was its failure to address the natural environment.[142]

60. The Green Book requires departments to estimate the net present value of a proposed project. Departments convert costs and benefits that occur over the life of a project to "present values" by applying a discount rate. The standard Green Book discount rate requires departments to halve the value they place on benefits expected in 20 years from now, whilst benefits expected in 50 years from now are reduced by 80%. Discounting reflects that society as a whole prefers to receive goods and services now rather than later and prefers to defer costs to future generations.[143] Higher discount rates give greater weight to the interests of the current rather than future generations and make it more difficult for departments to justify investing in projects—including adaptation projects—that yield long-term benefits.

61. In response to the Stern Review on the Economics of Climate Change, HM Treasury issued, in 2008, new Green Book guidance on the discounting treatment of projects with very long-term effects (a minimum of 50 years) and which involve substantial and irreversible wealth transfers between generations.[144] Such projects might include major investment in infrastructure to improve its long-term resilience to climate change. The guidance introduced a new lower discount rate to be used alongside the standard Green Book rate in project appraisals. The new rate, which is closer to the rates used in the Stern Review, requires departments to reduce by 75% the value of benefits expected in 50 years from now.[145] There is no consensus amongst economists on discounting. Some argued that the Stern Review used too low a rate, and others have questioned the use of discounting to inform decisions which have major long-term and irreversible effects on the natural environment.[146]

62. Defra is currently leading an interdepartmental review that aims to establish a clear analytical framework for considering sustainable development during policy development, appraisal and evaluation. The review is addressing concerns that cost-benefit analysis is too simplistic a tool for appraising actions which may have major impacts on the natural environment. Amongst other things, the review is considering how departments can improve the valuation of the natural environment in policy appraisal. It is also looking at discounting, as part of considering how the impacts of current decisions on future generations can be made more transparent to policy makers and the public.[147]

63. Despite recent revisions to HM Treasury's Green Book, the rules and practice of policy appraisal can act as a barrier to public bodies getting approval for adaptation action that will deliver long-term benefits. If we do not invest in adaptation action now this will increase the cost of climate change to future generations. Defra is currently looking at how sustainable development should be addressed as part of policy appraisal. We recommend that in taking this work forward, the Government looks at how departments can improve the way they value the impacts on the natural environment of potential adaptation action. The Government should also look again at the discount rates departments must apply when estimating the long-term benefits of adaptation actions.

112 National Audit Office, Adapting to climate change, 2009, Figure 8 Back

113 National Audit Office, Adapting to climate change, 2009, paras 2.5, 2.28 Back

114 National Audit Office, Adapting to climate change, 2009, paras 2.28, 3.1 Back

115 National Audit Office, Adapting to climate change, 2009, paras 3.2, 3.3 and Figures 6, 7 Back

116 Ev 97 Back

117 Ev 19 Back

118 Government Office for Science, Land use futures: making the most of land in the 21^st century, 2010, p 232 Back

119 Ev 28 Back

120 Ev 28 Back

121 Ev 177 Back

122 Ev 1 Back

123 Ev 120 Back