Plan or React? Analysis of Adaptation Costs and Benefits Using Integrated Assessment Models

Abstract

This report examines adaptation and mitigation within an integrated framework. Global and regional costs of adaptation are assessed dynamically and the resulting benefits are quantified. This is accomplished by developing a framework to incorporate adaptation as a policy variable within three Integrated Assessment Models (IAMs); the global Dynamic Integrated model of Climate and the Economy (DICE), the Regional Integrated model of Climate and the Economy (RICE), and the World Induced Technical Change Hybrid (WITCH) model. The framework developed here takes into account investments in reactive adaptation and in adaptation "stocks", as well as investments in building adaptive capacity. This report presents the first inter-model comparison of results on adaptation costs using the emerging category of adaptation-IAMs. Results show that least-cost policy response to climate change will need to involve subsantial amounts of mitigation efforts, investments in adaptation stock, reactive adaptation measures and adaptive capacity to limit the remaining damages.

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

“…Details are provided in the SI. The updated impact estimates for the categories coastal, health, catastrophic, settlements and ecosystems are for most regions larger than those reported in Agrawala et al (2010Agrawala et al ( , 2011table S5). Adaptation cost estimates have been developed by adjusting Agrawala et al (2010Agrawala et al ( , 2011 data to the impact categories considered in this study.…”

“…Despite the lively debate about climate change damage functions and how they relate to integrated assessment (Dell et al 2012, Dell et al 2014, Burke et al 2015, only a few studies have gathered regional, sectorial data on climate impacts and adaptation costs at global scale, and used them to integrate the costs and benefits of adaptation in IAMs (de Bruin et al 2009, Agrawala et al 2010Agrawala et al , 2011. In order to explore how considerations on equitable emission allowance allocations depend on damage and adaptation cost estimates, here we update the set of damage and adaptation cost functions used in the WITCH model, and compare it to the FAIR model, which utilizes the damage and adaptation estimates provided by de Bruin et al (2009).…”

Building Uncertainty into the Adaptation Cost Estimation in Integrated Assessment Models

“…Regional reduced-form damage functions link the global temperature increase above pre-industrial levels to changes in regional gross domestic product (GDP). WITCH also features an adaptation module (see Agrawala et al 2010Agrawala et al , 2011) that aggregates the possible adaptive responses into specific adaptive capacity-building, anticipatory adaptation and reactive adaptation. The different forms of adaptation expenditure reduce climate change damages, but need to compete, under a limited budget, with other forms of investments/expenditures (e.g.…”

“…The idea behind this paper is to develop a more general framework to account for uncertainty, reflecting different degrees of risk aversion as well as uncertainty in climate change damages, into a deterministic, integrated assessment model (the WITCH model by Bosetti et al, (2006), developed to include adaptation choices as in Agrawala et al (2010). The concept underpinning the analysis it that of defining a risk premium which allows us to estimate a "damage mark-up" that varies with the degrees of aversion to risk.…”

Assessing Options to Increase Climate Support

“…Such uncertainties in climate impacts lead to insecurities in how to address them most efficiently, and therefore hesitation in estimating current and future financial needs to address them. However, immediate needs for adaptation finance are likely to be unaffected by emissions trajectories until the middle of the century (Agrawala et al, 2010), though large investments, such as sea-rise defences for coastal cities, could be different depending on these emissions pathways. Finally, while financial needs for adaptation are related to the environmental impacts of climate change, they are also influenced by socio-economic changes within a country (population growth, location of population and assets in climate-vulnerable areas).…”