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Space-time discounting in climate change adaptation

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Abstract

Discounting is traditionally interpreted as the technique for comparing the values of costs and benefits which occur at different points in time. It endeavors to incorporate how humans trade off values to be received in the future versus value received immediately into economic analysis. Interpreted as such, discounting neglects important spatial influences on how values are compared, thereby hindering cost-benefit analyses of climate change adaptation. In this article, we present new theory on space-time discounting and use it to analyze aspects of how humans adapt to climate change. Three climate change adaptation cases are considered. First, analysis of crop indemnity payments to farmers shows that failure to discount across space and time yields inaccurate evaluations of adaptation projects. Second, adaptation efforts of the Commonwealth of Nations show irregular patterns of international cooperation that suggest spatial discounting of adaptation which are not found in temporal discounting. Third, the nexus between climate change, migration, and conflict shows how various forms of space-time discounting can influence whether climate change and migration will lead to conflict. Collectively, these cases demonstrate the analytical power of the space-time discounting theory and also show how the complexity of climate change adaptation can challenge and strengthen this theory. Finally, this article’s analysis demonstrates that proper discounting must include space as well as time.

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Notes

  1. $1000 * exp(−0.01 yr−1 *10 yr) ≈ $905; $1000 * exp(−0.1yr−1 *10 yr) ≈ $368.

  2. A person’s welfare simply means how well her life fares, which may or may not relate to how much money she has. The term welfare is often used synonymously with utility and preference. This usage is problematic: we often prefer outcomes beyond just what makes our own lives fare well. In this paper, we assume that utility and welfare are equivalent and leave open the relationship between these concepts and the concept of preference.

  3. Adler and Posner (2006) offer an excellent introduction to and extension of traditional CBA theory.

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Acknowledgements

This paper has benefited from helpful suggestions from many people, in particular Brent Yarnal, Klaus Keller, Nancy Tuana, Deryck Holdsworth, James Jeffords, and Kathryn Doherty. Brent Yarnal, Patrick Applegate, Crista Livecchi, Elizabeth Crisfield, Howard Rachlin, and three anonymous reviewers provided helpful comments on earlier drafts of this paper.

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Authors and Affiliations

  1. Department of Geography, Pennsylvania State University, 302 Walker Building, University Park, PA, 16802, USA

    Seth D. Baum & William E. Easterling

  2. Rock Ethics Institute, Pennsylvania State University, 201 Willard Building, University Park, PA, 16802, USA

    Seth D. Baum

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  1. Seth D. Baum
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  2. William E. Easterling
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Correspondence to Seth D. Baum.

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Baum, S.D., Easterling, W.E. Space-time discounting in climate change adaptation. Mitig Adapt Strateg Glob Change 15, 591–609 (2010). https://doi.org/10.1007/s11027-010-9239-9

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