Climate change

Economic Aspects of Adaptation to Climate Change: Costs, Benefits and Policy Instruments


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Executive Summary | Table of ContentsComments by experts 
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ISBN: 9789264046030
Published: 28 May 2008

Edited by Shardul Agrawala and Samuel Fankhauser

Climate change poses a serious challenge to social and economic development. Efforts to reduce greenhouse gas emissions need to move hand in hand with policies and incentives to adapt to the impacts of climate change. How much adaptation might cost, and how large its benefits might be, are issues that are increasingly relevant both for on-the-ground projects and in national and international contexts.

This report provides a critical assessment of adaptation costs and benefits in key climate sensitive sectors, as well as at national and global levels. It moves the discussion beyond cost estimation to the potential and limits of economic and policy instruments - including insurance and risk sharing, environmental markets and pricing, and public private partnerships - that can be used to motivate adaptation actions.

The report cautions that recent headline estimates on the global price-tag for adaptation face serious limitations. In addition, the few available studies have tended to stack upon the assumptions made in preceding studies. Therefore, a consensus, even in order of magnitude terms, is premature and may be misleading.

Costing or raising large sums of money to finance adaptation is clearly important, but will not alleviate the challenge of ensuring that individuals, businesses, governments and civil society make timely, well-informed, and efficient adaptation decisions.

The report therefore also calls for a raft of policy instruments to establish the right incentives to influence such decisions. Setting up the right incentive and partnership structures to promote adaptation, however, will be a daunting task.  Adaptation to climate change as a public policy challenge has only just emerged.

Table of Contents

Executive Summary
Chapter 1: Putting Climate Change Adaptation in an Economic Context
Chapter 2: Empirical Estimates of Adaptation Costs and Benefits: A Critical Assessment
Chapter 3: Economic and Policy Instruments to Promote Adaptation

Comments by experts

Ian Burton, Scientist Emeritus, Adaptation and Impacts Research Group (AIRG), Meteorological Service of Canadain: book review in Climate and Development.                                             

Angel Gurria, Secretary-General, OECD
"Adapting to a warmer world is a necessity, but it must be planned carefully and must rest on a sound economic footing. This volume marks an important advance in our understanding of the costs and benefits of adaptation across sectors and regions, and at the global level. It also makes a strong case that efforts on adaptation costing and financing need to move hand in hand with the use of appropriate instruments that create the right incentives for individuals, businesses, governments, and society to take better account of the risks posed by climate change."

Nicholas Stern, Stern Review on the Economics of Climate Change
"Adaptation must be an integral part of the global deal that will succeed the Kyoto Protocol. Developing countries rightly look to the developed world to help them in their development in the context of a changing climate. But we are only just starting to understand the policy challenges of adaptation - this book makes an important contribution to this critical debate."

Rajendra Pachauri, Chairman, Intergovernmental Panel on Climate Change
"This book is an invaluable addition to the literature on the economic aspects of adaptation to the impacts of climate change. While polices for adaptation must rest firmly on reliable estimates of location-specific costs and benefits, information and analysis on this subject available currently is quite inadequate. This book would certainly provide substance to the material available in the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), and therefore be of great value to policymakers."

Ian Johnson, former Vice President for Sustainable Development at the World Bank, and Chairman of IDEAcarbon
"Adaptation is finally receiving the attention it deserves. This is good news. We have to recognize that our climate will change – is already changing – even if the most stringent mitigation action is taken.  However, in the rush to adapt we must not ignore the rich experience we have on how public policy is best implemented. This book provides a useful reminder of the fundamental policy principles that must guide adaptation."

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