How Harmful are Adaptation Restrictions

Kelly C. de Bruin and Rob Dellink
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Kelly C. de Bruin: Wageningen University

No 2009.58, Working Papers from Fondazione Eni Enrico Mattei

Abstract: The dominant assumption in economic models of climate policy remains that adaptation will be implemented in an optimal manner. There are, however, several reasons why optimal levels of adaptation may not be attainable. This paper investigates the effects of suboptimal levels of adaptation, i.e. adaptation restrictions, on the composition and level of climate change costs and on welfare. Several adaptation restrictions are identified and then simulated in a revised DICE model, extended with adaptation (AD-DICE). We find that especially substantial over-investment in adaptation can be very harmful due to sharply increasing marginal adaptation costs. Furthermore the potential of mitigation to offset suboptimal adaptation is investigated. When adaptation is not possible at extreme levels of climate change, it is cost-effective to use more stringent mitigation policies in order to keep climate change limited, thereby making adaptation possible. Furthermore not adjusting the optimal level of mitigation to these adaptation restrictions may double the costs of adaptation restrictions, and thus in general it is very harmful to ignore existing restrictions on adaptation when devising (efficient) climate policies.

Keywords: Integrated Assessment Modelling; Adaptation; Climate Change (search for similar items in EconPapers)
JEL-codes: Q25 Q28 (search for similar items in EconPapers)
Date: 2009-07
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: How Harmful are Adaptation Restrictions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2009.58

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