Post on 03-Jan-2016
The Economics of Climate Change Adaptation
UNDP Accra 2012
Robert Mendelsohn
Yale University
Policy Questions
• What is adaptation?
• What adaptations are efficient?
• When should they occur?
• Where should they be done?
What is adaptation?
• Change in behavior in response to climate change.
• Examples: avoid running in hot afternoon, change to heat-loving crops, adjust water management, control disease causing pests
Objective of Adaptation
• Maximize net benefits (benefits minus costs) given that local climate has changed– Equate marginal benefit to marginal cost
• Depends on local conditions– Local climate– Local market– Other local factors
Where Should Adaptation be Done?
• Everywhere, but priority to places where climate change is having largest impact -Low latitudes could bear 70% of damages of climate change because already hot
• Not necessarily places with largest climate change (north pole)
What sectors are at risk?
• Market: agriculture by far the largest, energy, water, coastal, and forestry
• Nonmarket: ecosystem change (species loss, shifting systems), disease, heat stress, cold stress, recreation
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Can detailed impacts be predicted?
• Most analyses of climate impacts reveal hill-shaped relationship with temperature
• Benefits to farms in cool locations
• Damages to farms in warm locations
• Impacts vary a great deal across the landscape
Marginal impacts of Temperature and Precipitation
Timing
• Timing of many adaptation actions• Done too soon, raises cost and can be
ineffective (new crop before warm enough will not grow well)
• Done too late, damages can be large (as if there is no adaptation)
• Because adaptation actions must wait for climate to change, the bulk of adaptation actions need to be done in the second half of this century
Autonomous Adaptation
• Autonomous– Private benefit for actor– Self interest to perform– Will be done without help– Most often done after climate changes
• Examples:– Shifting from crops to animals– Switching crop and animal species– Changing timber species
Public Adaptations
• Benefit many (jointly consumed)
• Require coordination (government)
• Examples– Conservation – Water planning– Flood control– Storm warning – Technical change
What should governments do?
• Help create setting to encourage markets and private ownership of private resources– Encourage long term use rights – Enforce private property rights
• Manage public adaptations (conservation, public resources, externalities)
• Address fairness issues
Common Property
• Requires collective action to protect• Individual users will not adapt• Overharvest common forests or fisheries,
overgraze grasslands, overutilize water resources
• Climate change will make these current problems worse by making these resources more scarce
• Need to encourage long term use rights
Nonmarket Adaptations
• Public health responses to potential illnesses and heat stress
• Retreat options for marshes and mangroves against sea level rise
• Flexible and dynamic conservation management for species migration to new habitat
Externalities
• Secondary ozone pollution formation will require tighter regulations on emissions
• Flooding will require land use regulations and flood control
Severe Weather Events
• Can adapt now to hurricanes, droughts, floods because current problem
• Severe events likely to cause more damage in the future as economy grows
• Greenhouse gases may make events more intense of frequent
Can poor adapt?
• Poor can do autonomous adaptation
• Household farms may adapt better than commercial farms because less specialized
• May help poor adapt for equity reasons: they are low income and unlikely to have contributed much to emissions
Additionality
• Unfair to expect climate change funds to pay for development
• Yet focus on additionality will hamper efforts to proceed-too difficult to parse out what is adaptation versus development
• Recommend new focus on integration between climate adaptation and development
Policy Suggestions
• Do not confuse adaptation and mitigation
• Providing assistance for mitigation does not help a poor country cope with climate change
What adaptation can be done now?
• Focus on funding public adaptation where needed and when it is needed
• Do planning and research to get ready• Encourage institutional changes: improve public
management and markets for natural resources (land, water, fisheries)
• Help developing countries grow and become less dependent on climate sensitive economic sectors- namely agriculture