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Climate Policy and the Optimal Balance between Mitigation, Adaptation and Unavoided Damage

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  • Francesco Bosello

    (Unversity of Milan and Fondazione Eni Enrico Mattei)

  • Carlo Carraro

    (University of Venice, CEPR, CESifo and Fondazione Eni Enrico Mattei)

  • Enrica De Cian

    (University of Venice and Fondazione Eni Enrico Mattei)

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 somehow 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 cost of adaptation.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.32.

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Date of creation: Mar 2010
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Handle: RePEc:fem:femwpa:2010.32

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Keywords: Climate Change Impacts; Mitigation; Adaptation; Integrated Assessment Model;

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  1. 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. Carlo Carraro & Emanuele Massetti, 2010. "Beyond Copenhagen: A Realistic Climate Policy in a Fragmented World," Working Papers 2010.136, Fondazione Eni Enrico Mattei.
  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. YATSENKO, Yuri & HRITONENKO, Natali & BRECHET, Thierry, 2014. "Modeling of environmental adaptation versus pollution mitigation," CORE Discussion Papers 2014006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. HRITONENKO, Natali & YATSENKO, Yuri, 2011. "Sustainable growth and modernization under environmental hazard and adaptation," CORE Discussion Papers 2011025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. BRECHET, Thierry & HRITONENKO, Natali & YATSENKO, Yuri, . "Adaptation and mitigation in long-term climate policy," CORE Discussion Papers RP -2479, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Francesco Bosello & Enrica De Cian, 2013. "Climate Change, Sea Level Rise, and Coastal Disasters. A Review of Modeling Practices," Working Papers 2013.104, Fondazione Eni Enrico Mattei.
  7. David I. Stern & Frank Jotzo & Leo Dobes, 2013. "The Economics of Global Climate Change: A Historical Literature Review," CCEP Working Papers 1307, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  8. 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).
  9. 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.

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