Alleviating inequality in climate policy costs: an integrated perspective on mitigation, damage and adaptation

Abstract

Equity considerations play an important role in international climate negotiations. While policy analysis has often focused on equity as it relates to mitigation costs, there are large regional differences in adaptation costs and the level of residual damage. This paper illustrates the relevance of including adaptation and residual damage in equity considerations by determining how the allocation of emission allowances would change to counteract regional differences in total climate costs, defined as the costs of mitigation, adaptation, and residual damage. We compare emission levels resulting from a global carbon tax with two allocations of emission allowances under a global cap-and-trade system: one equating mitigation costs and one equating total climate costs as share of GDP. To account for uncertainties in both mitigation and adaptation, we use a model-comparison approach employing two alternative modeling frameworks with different damage, adaptation cost, and mitigation cost estimates, and look at two different climate goals. Despite the identified model uncertainties, we derive unambiguous results on the change in emission allowance allocation that could lessen the unequal distribution of adaptation costs and residual damages through the financial transfers associated with emission trading.

Improving poverty and inequality modelling in climate research

“…Climate-related research has established firmly that different populations within countries are affected differently by climate change and climate mitigation policies, very often with the poor bearing the most drastic consequences [1][2][3][4][5] . Climate change affects poverty through many channels, such as through livelihoods, consumption, assets, health, and productivity 6,7 .…”

“…The research gaps identified then have been repeated in subsequent IPCC assessments, showing they persist till today 4,5 . Many studies with countries or regions as units of analysis have concluded that poor countries are more vulnerable and have lower adaptive capacity to climate change [1][2][3] . Moreover, aggregate cost estimates mask significant differences across populations 18 , and adaptive capacity is uneven within societies as well 19 .…”

Greater increases in temperature extremes in low versus high income countries

“…The different challenges of climate change facing low versus high income countries have long been recognised (United Nations Framework Convention on Climate Change, 1992), however, the consequences of this climate inequity are often discussed in a future tense-as an impending ramification of geography and economics (e.g. Mendelsohn et al 2006, De Cian et al 2016, Harrington et al 2016. The simple latitudinal difference between the majority of the world's low and high income countries (figure S1 available at stacks.iop.org/ERL/12/034007/mmedia) suggests that differences in the increase in temperature extremes between these country groups should already be evident in observations.…”

Economy-wide effects of coastal flooding due to sea level rise: a multi-model simultaneous treatment of mitigation, adaptation, and residual impacts

“…We perform a multi-model macroeconomic assessment (figure 1) employing two different kinds of global macroeconomic assessment models: the inter-temporal optimal economic growth models FAIR and WITCH (Den Elzen et al 2014, Emmerling et al 2016), and the CGE model GEM-E3 (E3MLAB 2017). These state-of-theart modeling tools are extensively used to evaluate the consequences of climate-related impacts and the effects of climate change adaptation in the medium-to-long term (Hof et al 2008, Ciscar et al 2012, Clarke et al 2014, Admiraal et al 2016, De Cian et al 2016. The DIVA model provides estimates of the direct impacts of coastal SLR in terms of expected annual damages by sea floods (the costs of migration or people actually flooded are not taken into account in our analysis), as well as annual costs for adaptation in terms of dike construction and dike maintenance.…”