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Adapting More Cleverly To Climate Change By Using ‘Real Options’ To Address The Uncertainties

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  • Dobes, Leo

Abstract

Scientists consider that some climate change is already inevitable, even if anthropogenic greenhouse emissions are stabilised immediately. Adaptation measures are therefore needed, irrespective of any mitigation action. But policy discussion is focussed on deterministic responses, generally risk-based "worst case‟ scenarios. An example is the development of more stringent standards for buildings and for coastal development. Such "climate proofing‟ is misconceived in the face of the huge uncertainties involved. Economists need to promote more rational policy frameworks that draw on cost-benefit analysis, including the use of "real options‟ to minimise the cost to society of adapting to climate change.

Suggested Citation

  • Dobes, Leo, 2009. "Adapting More Cleverly To Climate Change By Using ‘Real Options’ To Address The Uncertainties," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47615, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare09:47615
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    File URL: http://purl.umn.edu/47615
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    References listed on IDEAS

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    1. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-937, July.
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    Cited by:

    1. Sanderson, Todd & Ahmadi-Esfahani, Fredoun Z., 2010. "Climate change and Australia’s comparative advantage in broadacre agriculture," 2010 Conference, August 26-27, 2010, Nelson, New Zealand 96493, New Zealand Agricultural and Resource Economics Society.
    2. Dobes, Leo, 2012. "Adaptation to Climate Change: Formulating Policy under Uncertainty," Working Papers 249390, Australian National University, Centre for Climate Economics & Policy.
    3. Andrew Macintosh, 2013. "Coastal climate hazards and urban planning: how planning responses can lead to maladaptation," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(7), pages 1035-1055, October.
    4. Leo Dobes, 2010. "Notes on Applying 'Real Options' to Climate Change Adaptation Measures, with Examples from Vietnam," CCEP Working Papers 0710, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.

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    Keywords

    Environmental Economics and Policy;

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