Climate Policy and the Optimal Balance between Mitigation, Adaptation and Unavoided Damage

Climate Change Economics (CCE), Vol. 1, Issue 2, 2010

Posted: 30 May 2011

See all articles by Carlo Carraro

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

Francesco Bosello

University of Milan - Department of Economics, Business and Statistics; CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

Enrica De Cian

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

Multiple version iconThere are 3 versions of this paper

Date Written: August 1, 2010

Abstract

It has become commonly accepted that a successful climate strategy should compound mitigation and adaptation. The accurate combination between adaptation and mitigation that can best address climate change is still an open question. This paper proposes a framework that integrates mitigation, adaptation, and climate change residual damages into an optimisation model. This set-up is used to provide some insights on the welfare maximising resource allocation between mitigation and adaptation, on their optimal timing, and on their marginal contribution to reducing vulnerability to climate change. The optimal mix between three different adaptation modes (reactive adaptation, anticipatory adaptation, and investment in innovation for adaptation purposes) within the adaptation bundle is also identified. Results suggest that the joint implementation of mitigation and adaptation is welfare improving. Mitigation should start immediately, whereas adaptation somewhat later. It is also shown that in a world where the probability of climate-related catastrophic events is small and where decision makers have a high discount rate, adaptation is unambiguously the preferred option. Adaptation needs, both in developed and developing countries, will be massive, especially during the second half of the century. Most of the adaptation burden will be on developing countries. International cooperation is thus required to equally distribute the costs of adaptation.

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

Suggested Citation

Carraro, Carlo and Bosello, Francesco and De Cian, Enrica, Climate Policy and the Optimal Balance between Mitigation, Adaptation and Unavoided Damage (August 1, 2010). Climate Change Economics (CCE), Vol. 1, Issue 2, 2010. Available at SSRN: https://ssrn.com/abstract=1854065

Carlo Carraro (Contact Author)

Fondazione Eni Enrico Mattei (FEEM) ( email )

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International Center for Climate Governance ( email )

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Francesco Bosello

University of Milan - Department of Economics, Business and Statistics

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Milan, 20122
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

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Lecce, I-73100
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Enrica De Cian

Fondazione Eni Enrico Mattei (FEEM) ( email )

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

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici ( email )

via Augusto Imperatore, 16
Lecce, I-73100
Italy

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