The Critical Role of Markets in Climate Change Adaptation

Sarah E. Anderson, Terry L. Anderson, Alice C. Hill, Matthew Kahn, Howard Kunreuther, Gary Libecap, Hari Mantripragada, Pierre Mérel (), Andrew Plantinga and V. Smith

No 24645, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper summarizes and synthesizes the role of markets in facilitating climate change adaptation. It explains how market signals encourage adaptation through land markets. It also identifies impediments to critical market signals, provides related policy recommendations, and points to promising new technologies. Urban, coastal, and agricultural land markets provide effective signals of the emerging costs of climate change. These signals encourage adjustments by both private owners and by policy officials in taking preemptive action to reduce costs. In agriculture, they promote consideration of new cropping and tillage practices, seed types, timing, and location of production. They also stimulate use of new irrigation technologies. In urban areas, they motivate new housing construction, elevation, and location away from harm. They channel more efficient use of water and its application to parks and other green areas to make urban settings more desirable with higher temperatures. To be effective, however, land markets must reflect multiple traders and prices must be free to adjust. Where these conditions are not met, land market signals will be inhibited and market-driven adaptation will be reduced. Because public policy is driven by constituent demands, it may not be a remedy. The evidence of the National Flood Insurance Program and federal wildfire response illustrates how politically difficult it may be to adjust programs to be more adaptive.

JEL-codes: Q1 Q15 Q21 Q22 Q24 Q25 Q28 Q51 Q54 R14 (search for similar items in EconPapers)
Date: 2018-05
New Economics Papers: this item is included in nep-agr and nep-env
Note: EEE
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Published as Sarah E. Anderson & Terry L. Anderson & Alice C. Hill & Matthew E. Kahn & Howard Kunreuther & Gary D. Libecap & Hari Mantripragada & Pierre Mérel & Andrew J. Plantinga & V. Kerry Smith, 2019. "The Critical Role Of Markets In Climate Change Adaptation," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-17, February.

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Journal Article: THE CRITICAL ROLE OF MARKETS IN CLIMATE CHANGE ADAPTATION (2019)
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