An Analysis of Adaptation as a Response to Climate Change

62 Pages Posted: 28 Nov 2009  

Francesco Bosello

Fondazione Eni Enrico Mattei (FEEM); University of Milan - Department of Economics, Business and Statistics; Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC)

Carlo Carraro

Fondazione Eni Enrico Mattei (FEEM); Ca' Foscari University of Venice; CMCC - Euro Mediterranean Centre for Climate Change (Climate Policy Division); IPCC; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Centre for European Policy Studies, Brussels; Green Growth Knowledge Platform; International Center for Climate Governance

Enrica De Cian

Fondazione Eni Enrico Mattei (FEEM); Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC)

Date Written: November 25, 2009

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.

Keywords: Climate change impacts, mitigation, adaptation, integrated assessment model

JEL Classification: Q54, Q56, Q43

Suggested Citation

Bosello, Francesco and Carraro, Carlo and De Cian, Enrica, An Analysis of Adaptation as a Response to Climate Change (November 25, 2009). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 26_09. Available at SSRN: https://ssrn.com/abstract=1513286 or http://dx.doi.org/10.2139/ssrn.1513286

Francesco Bosello

Fondazione Eni Enrico Mattei (FEEM) ( email )

Campo S. M. Formosa, Castello 5252
Venezia, 30122
Italy
+39 041 271 1459 (Phone)
+39 041 271 1461 (Fax)

University of Milan - Department of Economics, Business and Statistics

Via Festa del Perdono, 7
Milan, 20122
Italy

Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC)

Viale Gallipoli, 49
Lecce, 73100
Italy

Carlo Carraro (Contact Author)

Fondazione Eni Enrico Mattei (FEEM) ( email )

Isola di San Giorgio Maggiore 8
Venezia, 30124
Italy
+39 04 12700460 (Phone)
+39 04 12700412 (Fax)

Ca' Foscari University of Venice ( email )

Cannaregio 873
Venice, 30121
Italy
+39 04 1234 9166 (Phone)
+39 04 1234 9176 (Fax)

HOME PAGE: http://www.carlocarraro.org/

CMCC - Euro Mediterranean Centre for Climate Change (Climate Policy Division) ( email )

Via Augusto Imperatore 16
Lecce, 73100
Italy
+39 0832 288650 (Phone)
+39 0832 277603 (Fax)

IPCC ( email )

C/O World Meteorological Organization
7bis Avenue de la Paix
Geneva, CH-1211
Switzerland
+41-22-730-8208/54/84 (Phone)
+41-22-730-8025/13 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for European Policy Studies, Brussels

1 Place du Congres
B-1000 Brussels, 1000
Belgium
+32 2 229 3911 (Phone)
+32 2 219 4151 (Fax)

Green Growth Knowledge Platform ( email )

International Environment House
11-13 chemin des Anemones
Geneva, 1219
Switzerland

HOME PAGE: http://www.greengrowthknowledge.org/

International Center for Climate Governance ( email )

Island of San Giorgio Maggiore 8
Venice, I-30124
Italy

HOME PAGE: http://www.iccgov.org/

Enrica De Cian

Fondazione Eni Enrico Mattei (FEEM) ( email )

Campo S. M. Formosa, Castello 5252
Venice, 30122
Italy

Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC) ( email )

Viale Gallipoli, 49
Lecce, 73100
Italy

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