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Climate Policy And The Optimal Balance Between Mitigation, Adaptation And Unavoided Damage

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Author Info

  • FRANCESCO BOSELLO

    (University of Milan and Fondazione ENI Enrico Mattei, Italy)

  • CARLO CARRARO

    () (University of Venice, CEPR, CESifo and Fondazione, ENI Enrico Mattei, Isola di San Giorgio 30124, Venice, Italy)

  • ENRICA DE CIAN

    (University of Venice and Fondazione ENI Enrico Mattei, Italy)

Abstract

It has become commonly accepted that a successful climate strategy should compound mitigation and adaptation. The accurate combination between adaptation and mitigation that can best address climate change is still an open question. This paper proposes a framework that integrates mitigation, adaptation, and climate change residual damages into an optimisation model. This set-up is used to provide some insights on the welfare maximising resource allocation between mitigation and adaptation, on their optimal timing, and on their marginal contribution to reducing vulnerability to climate change. The optimal mix between three different adaptation modes (reactive adaptation, anticipatory adaptation, and investment in innovation for adaptation purposes) within the adaptation bundle is also identified. Results suggest that the joint implementation of mitigation and adaptation is welfare improving. Mitigation should start immediately, whereas adaptation somewhat later. It is also shown that in a world where the probability of climate-related catastrophic events is small and where decision makers have a high discount rate, adaptation is unambiguously the preferred option. Adaptation needs, both in developed and developing countries, will be massive, especially during the second half of the century. Most of the adaptation burden will be on developing countries. International cooperation is thus required to equally distribute the costs of adaptation.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Climate Change Economics.

Volume (Year): 01 (2010)
Issue (Month): 02 ()
Pages: 71-92

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Handle: RePEc:wsi:ccexxx:v:01:y:2010:i:02:p:71-92

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Related research

Keywords: Climate change impacts; mitigation; adaptation; integrated assessment model; Q54; Q56; Q43;

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References

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  1. Valentina Bosetti & Carlo Carraro & Marzio Galeotti & Emanuele Massetti & Massimo Tavoni, 2006. "WITCH. A World Induced Technical Change Hybrid Model," Working Papers 2006_46, Department of Economics, University of Venice "Ca' Foscari".
  2. Valentina Bosetti, Carlo Carraro, Marzio Galeotti, Emanuele Massetti, Massimo Tavoni, 2006. "A World induced Technical Change Hybrid Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 13-38.
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Cited by:
  1. Schenker, Oliver & Stephan, Gunter, 2012. "Terms-of-trade and the funding of adaptation to climate change and variability: An empirical analysis," ZEW Discussion Papers 12-056, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Fundamental questions on the economics of climate adaptation: Outlines of a new research programme," UFZ Reports 05/2012, Helmholtz Centre for Environmental Research (UFZ).
  3. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Ökonomische Grundfragen der Klimaanpassung: Umrisse eines neuen Forschungsprogramms," UFZ Reports 02/2012, Helmholtz Centre for Environmental Research (UFZ).
  4. HRITONENKO, Natali & YATSENKO, Yuri, 2011. "Sustainable growth and modernization under environmental hazars and adaptation," CORE Discussion Papers 2011025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Carlo Carraro & Emanuele Massetti, 2010. "Beyond Copenhagen: A Realistic Climate Policy in a Fragmented World," Working Papers 2010.136, Fondazione Eni Enrico Mattei.

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