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The Critical Role Of Markets In Climate Change Adaptation

Author

Listed:
  • SARAH E. ANDERSON

    () (Bren School of Environmental Science and Management, 2400 Bren Hall, University of California, Santa Barbara, CA 93106, USA)

  • TERRY L. ANDERSON

    () (Hoover Institution, Stanford University, CA 94305, USA)

  • ALICE C. HILL

    () (Hoover Institution, 1399 New York Ave. NW, Washington, DC 20005, USA)

  • MATTHEW E. KAHN

    () (Economics Department, Spatial Sciences and Environmental Studies, University of Southern California, NBER, IZA, USA)

  • HOWARD KUNREUTHER

    () (Decision Sciences & Public Policy, Operations, Information and Decisions (OID), Risk Management and Decision Processes Center, Wharton School, University of Pennsylvania, 3730 Walnut St., #563 Huntsman Hall, Philadelphia, PA 19104-6340, USA)

  • GARY D. LIBECAP

    (Hoover Institution, Stanford University, CA 94305, USA6Economics Department, Bren School of Environmental Science and Management, University of California, Santa Barbara, California, 93106, NBER, USA)

  • HARI MANTRIPRAGADA

    () (Department of Chemical and Petroleum Engineering, 940 Benedum Hall, University of Pittsburgh, 3700 O’Hara St, Pittsburgh, PA 15261, USA)

  • PIERRE MÉREL

    () (University of California, Davis Agricultural and Resource Economics, 1 Shields Ave, Davis, CA 95616, USA)

  • ANDREW J. PLANTINGA

    () (Bren School of Environmental Science and Management, University of California, Santa Barbara, CA 93106-5131, Office)

  • V. KERRY SMITH

    () (rizona State University, NBER, University Fellow, RFF, P.O. Box 7437, Cave Creek, AZ. 85327, USA)

Abstract

Markets, especially land markets, can facilitate climate change adaptation through price signals. A review of research reveals that urban, coastal, and agricultural land markets provide effective signals of the emerging costs of climate change. These signals encourage adjustments by both private owners and policy officials in taking preemptive action to reduce costs. In agriculture, they promote consideration of new cropping and tillage practices, seed types, timing, and location of production. They also stimulate use of new irrigation technologies. In urban areas, they motivate new housing construction, elevation, and location away from harm. They channel more efficient use of water and its application to parks and other green areas to make urban settings more desirable with higher temperatures. Related water markets play a similar role in adjusting water use and reallocation. To be effective, however, markets must reflect multiple traders and prices must be free to adjust. Where these conditions are not met, market signals will be inhibited and market-driven adaptation will be reduced. Because public policy is driven by constituent demands, it may not be a remedy. The evidence of the National Flood Insurance Program and federal wildfire response illustrates how politically difficult it may be to adjust programs to be more adaptive.

Suggested Citation

  • Sarah E. Anderson & Terry L. Anderson & Alice C. Hill & Matthew E. Kahn & Howard Kunreuther & Gary D. Libecap & Hari Mantripragada & Pierre Mérel & Andrew J. Plantinga & V. Kerry Smith, 2019. "The Critical Role Of Markets In Climate Change Adaptation," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-17, February.
  • Handle: RePEc:wsi:ccexxx:v:10:y:2019:i:01:n:s2010007819500039
    DOI: 10.1142/S2010007819500039
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    References listed on IDEAS

    as
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    Keywords

    Climate change; adaptive responses; land markets; water markets; urban; agricultural signals and responses;

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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