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An Analysis of Adaptation as a Response to Climate Change

Author

Listed:
  • Carlo Carraro

    () (Department of Economics, University Of Venice C� Foscari)

  • Francesco Bosello

    () (University of Milan, Fondazione Enrico Mattei, and CMCC)

  • Enrica De Cian

    () (University of Venice, Fondazione Enrico Mattei)

Abstract

Climate change is likely to have relevant effects on our future socio-economic systems. It is therefore important to identify how markets and policy jointly react to expected climate change to protect our societies and well-being. This study addresses this issue by carrying out an integrated analysis of both optimal mitigation and adaptation at the global and regional level. Adaptation responses are disentangled into three different modes: reactive adaptation, proactive (or anticipatory) adaptation, and investments in innovation for adaptation purposes. The size, the timing, the relative contribution to total climate-related damage reduction, and the benefit-cost ratios of each of these strategies are assessed for the world as a whole, and for developed and developing countries in both a cooperative and a non-cooperative setting. The study also takes into account the role of price signals and markets in inducing and diffusing adaptation. This leads to two scenarios: A pessimistic one, in which policy-driven adaptation bears the burden, together with mitigation, of reducing climate damage; and an optimistic one, in which markets also autonomously contribute to reducing some damages by modifying sectoral structure, international trade flows, capital distribution and land allocation. For all scenarios, the costs and benefits of adaptation are assessed using WITCH, an integrated assessment, intertemporal optimization, forward-looking model. Extensive sensitivity analysis with respect to the size of climate damages and of the discount rate has also been carried out.

Suggested Citation

  • Carlo Carraro & Francesco Bosello & Enrica De Cian, 2009. "An Analysis of Adaptation as a Response to Climate Change," Working Papers 2009_26, Department of Economics, University of Venice "Ca' Foscari".
  • Handle: RePEc:ven:wpaper:2009_26
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    References listed on IDEAS

    as
    1. Valentina Bosetti & Carlo Carraro & Romain Duval & Alessandra Sgobbi & Massimo Tavoni, 2009. "The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the WITCH Model," OECD Economics Department Working Papers 664, OECD Publishing.
    2. Butt, Tanveer A. & McCarl, Bruce A., 2004. "Farm and Forest Carbon Sequestration: Can Producers Employ it to Make Some Money?," Choices, Agricultural and Applied Economics Association, vol. 19(3).
    3. Stéphanie Jamet & Jan Corfee-Morlot, 2009. "Assessing the Impacts of Climate Change: A Literature Review," OECD Economics Department Working Papers 691, OECD Publishing.
    4. Bosello, Francesco & Roson, Roberto & Tol, Richard S.J., 2006. "Economy-wide estimates of the implications of climate change: Human health," Ecological Economics, Elsevier, vol. 58(3), pages 579-591, June.
    5. 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.
    6. Barry Smit & Ian Burton & Richard Klein & J. Wandel, 2000. "An Anatomy of Adaptation to Climate Change and Variability," Climatic Change, Springer, vol. 45(1), pages 223-251, April.
    7. 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.
    8. Fankhauser, Samuel & Smith, Joel B. & Tol, Richard S. J., 1999. "Weathering climate change: some simple rules to guide adaptation decisions," Ecological Economics, Elsevier, vol. 30(1), pages 67-78, July.
    9. 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.
    10. Carraro, Carlo & Siniscalco, Domenico, 1998. "International Institutions and Environmental Policy: International environmental agreements: Incentives and political economy1," European Economic Review, Elsevier, vol. 42(3-5), pages 561-572, May.
    11. Deke, Oliver & Hooss, Kurt Georg & Kasten, Christiane & Klepper, Gernot & Springer, Katrin, 2001. "Economic impact of climate change: simulations with a regionalized climate-economy model," Kiel Working Papers 1065, Kiel Institute for the World Economy (IfW).
    12. Valentina Bosetti & Carlo Carraro & Enrica De Cian & Romain Duval & Emanuele Massetti & Massimo Tavoni, 2009. "The Incentives to Participate in, and the Stability of, International Climate Coalitions: A Game-theoretic Analysis Using the Witch Model," Working Papers 2009.64, Fondazione Eni Enrico Mattei.
    13. Gary Yohe & Kenneth Strzepek, 2007. "Adaptation and mitigation as complementary tools for reducing the risk of climate impacts," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 12(5), pages 727-739, June.
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    Citations

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    Cited by:

    1. John Quiggin & David Adamson & Sarah Chambers & Peggy Schrobback, 2010. "Climate Change, Uncertainty, and Adaptation: The Case of Irrigated Agriculture in the Murray-Darling Basin in Australia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(s1), pages 531-554, December.
    2. Quiggin, John & Adamson, David & Chambers, Sarah & Schrobback, Peggy, 2009. "Climate change, mitigation and adaptation: the case of the Murray-Darling Basin in Australia," Risk and Sustainable Management Group Working Papers 149878, University of Queensland, School of Economics.
    3. Altvater, Susanne & de Block, Debora & Bouwma, Irene & Dworak, Thomas & Frelih-Larsen, Ana & Görlach, Benjamin & Hermeling, Claudia & Klostermann, Judith & König, Martin & Leitner, Markus & Marinova, , 2012. "Adaptation measures in the EU: Policies, costs, and economic assessment. "Climate Proofing" of key EU policies," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 110558.
    4. Schenker, Oliver & Stephan, Gunter, 2014. "Give and take: How the funding of adaptation to climate change can improve the donor's terms-of-trade," Ecological Economics, Elsevier, vol. 106(C), pages 44-55.
    5. 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).
    6. Karen Fisher-Vanden & Ian Sue Wing & Elisa Lanzi & David Popp, 2013. "Modeling climate change feedbacks and adaptation responses: recent approaches and shortcomings," Climatic Change, Springer, vol. 117(3), pages 481-495, April.
    7. 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).
    8. Miao, Qing & Popp, David, 2014. "Necessity as the mother of invention: Innovative responses to natural disasters," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 280-295.

    More about this item

    Keywords

    Climate change impacts; mitigation; adaptation; integrated assessment model;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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