Economics of Climate Change in Kenya

Stockholm Environment Institute

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Abstract: 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.