A changing climate could lead to a “greater scarcity of land”, Ireland’s budgetary watchdog has warned.
In a new report which examines ‘What climate change means for Ireland’s public finances’, the Irish Fiscal Advisory Council (IFAC) has warned that natural resources in Ireland could “dwindle” because of excessive dry weather, rainfall or rising sea levels.
IFAC outlined in its latest report that this could lead to “food, water and energy shortages”.
“There could be a greater scarcity of land due to competing land use requirements for reforestation and renewable energy infrastructure.
“This could raise the relative price of goods and services that have intensive land use,” it also detailed.
According to the council, a changing climate will impact the Irish economy and the public finances.
“Dealing with a changing climate is likely to be very costly,” IFAC also cautioned.
“There will be some costs associated with the transition to a less carbon-intensive economy, with the possibility of not hitting legal requirements, and from facing up to more regular extreme weather events,” the council outlined.
Climate change targets
Ireland is required to achieve “carbon neutrality” by 2050 and also meet three carbon budgets between 2021 and 2035.
IFAC highlighted that these require greenhouse gas emissions to be reduced by 51% by 2030 compared to 2018 levels.
However, the council said that based on Ireland’s existing plans it will not hit these targets.
“These indicate a reduction of just 29% by 2030. Failing to meet these targets would incur some compliance costs,” IFAC outlined.
It estimates this could lead to “costs at an annual average” in the region of €3.5 billion up to 2030.
The council also warned that even if Ireland was to meet its climate targets in full, there would be a range of “substantial impacts” on the public finances and detailed in the report that tax revenues could fall by €2.5 billion in today’s terms.
“On the spending side, the government will also likely need to provide substantial supports if Ireland’s climate targets are to be met,” it warned.
According to IFAC there would be “direct costs” to the agriculture sector from the climate transition.
It based its estimates on likely fiscal costs from the agriculture sector reducing greenhouse gas emissions on modelling work commissioned by Teagasc.
IFAC stated in the report: “This work has indicated that a large reduction in agricultural greenhouse gas emissions would require a reduction in livestock numbers.
“The Teagasc work assumes that livestock reductions result in a loss of farm income. This serves as the basis for our assumptions on government expenditure supports.”
IFAC has estimated that, depending on the total level of support that the government would have to provide, it could face costs of between €1.6 billion to €3 billion in today’s terms over the years 2026 to 2030.