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AD-DICE: an implementation of adaptation in the DICE model

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  • Kelly C. de Bruin
  • Rob B. Dellink
  • Richard S.J. Tol

    () (Economic and Social Research Institute, Dublin)

Abstract

Integrated Assessment Models (IAMS) have helped us over the past decade to understand the interactions between the environment and the economy in the context of climate change. Although it has also long been recognized that adaptation is a powerful and necessary tool to combat the adverse effects of climate change, most IAMs have not explicitly included the option of adaptation in combating climate change. This paper adds to the IAM and climate change literature by explicitly including adaptation in an IAM, thereby making the trade-offs between adaptation and mitigation visible. Specifically, a theoretical framework is created and used to implement adaptation as a decision variable into the DICE model. We use our new AD-DICE model to derive the adaptation cost functions implicit in the DICE model. In our set-up, adaptation and mitigation decisions are separable and AD-DICE can mimic DICE when adaptation is optimal. We find that our specification of the adaptation costs is robust with respect to the mitigation policy scenarios. Our numerical results show that adaptation is a powerful option to combat climate change, as it reduces most of the potential costs of climate change in earlier periods, while mitigation does so in later periods.

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File URL: http://www.fnu.zmaw.de/fileadmin/fnu-files/publication/working-papers/addicewp.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by Research unit Sustainability and Global Change, Hamburg University in its series Working Papers with number FNU-126.

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Length: 37 pages
Date of creation: Feb 2007
Date of revision: Feb 2007
Handle: RePEc:sgc:wpaper:126

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Keywords: integrated assessment modelling; adaptation; climate change;

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References

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  1. Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
  2. Plambeck, Erica L. & Hope, Chris & Anderson, John, 1997. "The model: Integrating the science and economics of global warming," Energy Economics, Elsevier, vol. 19(1), pages 77-101, March.
  3. Hope, Chris & Anderson, John & Wenman, Paul, 1993. "Policy analysis of the greenhouse effect : An application of the PAGE model," Energy Policy, Elsevier, vol. 21(3), pages 327-338, March.
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Citations

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Cited by:
  1. Döll, Sebastian, 2009. "Climate change impacts in computable general equilibrium models: An overview," HWWI Research Papers 1-26, Hamburg Institute of International Economics (HWWI).
  2. Gary W. Yohe & Richard S.J. Tol, 2007. "Precaution And A Dismal Theorem: Implications For Climate Policy And Climate Research," Working Papers FNU-145, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2007.
  3. Francesco Bosello, 2010. "Adaptation, Mitigation and “Green” R&D to Combat Global Climate Change. Insights From an Empirical Integrated Assessment Exercise," Working Papers 2010.22, Fondazione Eni Enrico Mattei.
  4. 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.
  5. Christine Schleupner & P. Michael Link, 2008. "Eiderstedt im Spannungsfeld zwischen Naturschutz- und Agrarpolitik - Entwicklung eines methodischen Ansatzes für ein nachhaltiges Ressourcenmanagement," Working Papers FNU-168, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2008.
  6. Bucher, Raphael & Guelden Sterzl, Jasmin, 2011. "From Coping with Natural Disasters in the Past to a Model of Future Optimal Adaptation," MPRA Paper 34237, University Library of Munich, Germany.
  7. Walid Marrouch & Amrita Ray Chaudhuri, 2011. "International Environmental Agreements in the Presence of Adaptation," Working Papers 2011.35, Fondazione Eni Enrico Mattei.
  8. Brechet, Thierry & HRITONENKO, Natali & YATSENKO, Yuri, 2010. "Adaptation and mitigation in long-term climate policies," CORE Discussion Papers 2010065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Hasson, Reviva & Löfgren, Åsa & Visser, Martine, 2009. "Climate Change in a Public Goods Game: Investment Decision in Mitigation versus Adaptation," Working Papers in Economics 416, University of Gothenburg, Department of Economics.
  10. 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).
  11. Buob, Seraina & Stephan, Gunter, 2011. "To mitigate or to adapt: How to confront global climate change," European Journal of Political Economy, Elsevier, vol. 27(1), pages 1-16, March.
  12. Kelly C. de Bruin & Rob B. Dellink, 2009. "How Harmful are Adaptation Restrictions," Working Papers 2009.58, Fondazione Eni Enrico Mattei.
  13. Müller-Fürstenberger, Georg & Stephan, Gunter, 2011. "What really matters: Discounting, technological change and sustainable climate," Ecological Economics, Elsevier, vol. 70(5), pages 978-987, March.
  14. 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).
  15. Osberghaus, Daniel & Finkel, Elyssa & Pohl, Max, 2010. "Individual adaptation to climate change: The role of information and perceived risk," ZEW Discussion Papers 10-061, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  16. 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).
  17. Benchekroun, H. & Marrouch, W. & Ray Chaudhuri, A., 2011. "Adaptation Effectiveness and Free-Riding Incentives in International Environmental Agreements," Discussion Paper 2011-120, Tilburg University, Center for Economic Research.
  18. Wang, Weiwei & McCarl, Bruce A., 2011. "Inter-Temporal Investment in Climate Change Adaptation and Mitigation," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103408, Agricultural and Applied Economics Association.
  19. Daiju Narita & Martin F. Quaas, 2012. "Adaptation to Climate Change and Climate Variability: Do It Now or Wait and See?," Kiel Working Papers 1809, Kiel Institute for the World Economy.

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