Climate Change Impacts and Market-Driven Adaptation: The Costs of Inaction Including Market Rigidities

Francesco Bosello and Ramiro Parrado

Chapter 6 in Climate and Development, 2021, pp 137-175 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In this paper, we present a simple impact assessment exercise conducted with a CGE model with two purposes. First, we address a specific criticism raised against IAMs: that of “overly optimistic” representation of adaptation processes that brings, as a consequence, the implicit conclusion of a tendency to underestimate climate change damages. We show that by introducing rigidities in adaptation processes, the general results of the economic damage assessment performed do change, but not substantively. We conclude that although a more difficult adaptation increases the damages as expected (in our specific case, globally by 20%, but at high-temperature levels), this is not sufficient to drastically change the overall picture. On the one hand, this highlights robustness of the results obtained with respect to adaptation processes. On the other hand, it shows that the autonomous market adaptation mechanisms embedded in CGE models explain only marginally low climate change costs. These are in fact due to omission of other impacts because of their proven difficulty to be modeled, such as extreme events, damages due to ecosystem services’ losses, as well as major disruptions due to the existence of tipping points…

Keywords: Climate Change; Global Warming; Sustainable Development; Development; Economic Growth; Adaptation; Paris Agreement; Social Conflict; Extreme Events; Integrated Assessment Model; Climate-Economic Liveability; Sustainable Development Goals; Social Welfare Functions; Intergenerational Transfers; Water Scarcity; Natural Resources; Migration; Climate-Migration Relationship; MENA Region; Renewable Energy; ICT; Energy Efficiency; Carbon Dioxide Removal; Net Negative Emissions; Co-Benefits; Afforestation; Reforestation; Mangroves; Developing Countries; Blue Carbon Projects; Ecosystems; Blockchain Technology; Illegal Logging; Mining Industries; Power Plants; Environmental Economics; Resource Economics; Climate Change Economics; Climate Policy; Mitigation (search for similar items in EconPapers)
JEL-codes: Q5 Q54 Q56 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789811240553_0006 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789811240553_0006 (text/html)
Ebook Access is available upon purchase.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789811240553_0006

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().