The Role of Markets and Governments in Helping Society Adapt to a Changing Climate
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This paper provides an economic perspective of adaptation to climate change. The paper specifically examines the role of markets and government in efficient adaptation responses. For adaptations to be efficient, the benefits from following adaptations must exceed the costs. For private market goods, market actors will follow this principle in their own interest. For public goods, governments must take on this responsibility. Governments must also be careful to design institutions that encourage efficiency or they could inadvertently increase the damages from climate change. Finally, although in a few cases actors must anticipate climate changes far into the future, generally it is best to learn and then act with respect to adaptation.
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