Abstract
An effective policy response to climate change will include, among other things, investments in lowering greenhouse gas emissions (mitigation), as well as short-term temporary (flow) and long-lived capital-intensive (stock) adaptation to climate change. A critical near-term question is how investments in reducing climate damages should be allocated across these elements of a climate policy portfolio, especially in the face of uncertainty in both future climate damages and also the effectiveness of yet-untested adaptation efforts. We build on recent efforts in DICE-based integrated assessment modeling approaches that include two types of adaptation—short-lived flow spending and long-lived depreciable adaptation stock investments—along with mitigation, and we identify and explore the uncertainties that impact the relative proportions of policies within a response portfolio. We demonstrate that the relative ratio of flow adaptation, stock adaptation, and mitigation depend critically on interactions among: 1) the relative effectiveness in the baseline of stock versus flow adaptation, 2) the degree of substitutability between stock and flow adaptation types, and 3) whether there exist physical limits on the amount of damages that can be reduced by flow-type adaptation investments. The results indicate where more empirical research on adaptation could focus to best inform near-term policy decisions, and provide a first step towards considering near-term policies that are flexible in the face of uncertainty.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
Other possible responses include R&D and geoengineering, which are not treated here.
Others are listed in the Online Resources.
This point was noted by an anonymous reviewer. Soft stock in the sense used here incorporates the adaptation capacity of Bosello et al. (2009).
Hall et al. (2012) distinguish between an upfront investment and an incremental strategy with periodic upgrades. Others have modeled mitigation with adaptation characterized as a flow only (Ingham et al. 2007; de Bruin et al. 2009; Felgenhauer and de Bruin 2009; de Bruin and Dellink 2011), or as a stock (Bosello 2008; Dumas and Ha-Duong 2008). Different modeling approaches are described further in the Online Resources. The PAGE model has also been used to analyze both policies simultaneously (e.g., Hope et al. 1993; Hope 2006).
More recent versions of DICE use an iso-elastic utility function (Nordhaus 2008), which we present in the Online Resources.
References
Adger WN, Lorenzoni I, O’Brien K (eds) (2009) Adapting to climate change: thresholds, values, governance. Cambridge University Press, Cambridge
Agrawala S, Bosello F, Carraro C, Bruin KD, Cian ED, Dellink R, Lanzi E (2010) Plan or React? Analysis of adaptation costs and benefits using integrated assessment models. OECD Environmental Working Papers. No. 23 (10 August), Organization for Economic Cooperation and Development
Agrawala S, Bosello F, Carraro C, Bruin KD, Cian ED, Dellink R, Lanzi E (2011) Plan or react? analysis of adaptation costs and benefits using integrated assessment models. Clim Chang Econ 2(3):175–208
Bosello F (2008) Adaptation, mitigation, and “green” R&D to combat global climate change: insights from an empirical integrated assessment exercise. Research Paper 0048/Working Paper 20 (October), Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC), Climate Impacts and Policy Division, Milan, Italy
Bosello F, Carraro C, Cian ED (2009) An analysis of adaptation as a response to climate change. Copenhagen Consensus on Climate, Copenhagen Consensus Center, Copenhagen
Bosello F, Carraro C, Cian ED (2010) Climate policy and the optimal balance between mitigation, adaptation, and unvoided damage. Working Papers, Department of Economics, Ca’ Foscari University of Venice. no. 10 (February), Dipartimento Scienze Economiche (DSE), Venice, Italy
Cline WR (2006) Meeting the challenge of global warming. In: Lomborg B (ed) How to spend $50 billion to make the world a better place. Cambridge University Press, Cambridge, pp 1–13
de Bruin KC (2011) Distinguishing between proactive (stock) and reactive (flow) adaptation. CERE Working Paper. 2011:8 (August), Centre for Environmental and Resource Economics (CERE)
de Bruin KC, Dellink RB (2011) How harmful are restrictions on adapting to climate change? Glob Environ Chang 21:34–45
de Bruin KC, Dellink RB, Tol RSJ (2009) AD-DICE: an implementation of adaptation in the DICE mode. Clim Chang 95:63–81
Dow K, Berkhout F, Preston BL, Klein RJT, Midgley G, Shaw MR (2013) Limits to adaptation. Nat Clim Chang 3:305–307
Dumas P, Ha-Duong M (2008) Optimal growth with adaptation to climate change. 16th Annual Conference of the European Association of Environmental and Resource Economists (EAERE). Gothenburg, Sweden
Felgenhauer T, de Bruin KC (2009) The optimal paths of climate change mitigation and adaptation under certainty and uncertainty. Int J Glob Warming 1(1/2/3):66–88
Felgenhauer T, Webster M (2013) Multiple adaptation types with mitigation: a framework for policy analysis. Glob Environ Chang 23:1556–1565
Hall JW, Brown S, Nicholls RJ, Pidgeon NF, Watson RT (2012) Proportionate adaptation. Nat Clim Chang 2:833–834
Hope C (2006) The marginal impact of CO2 from PAGE2002: an integrated assessment model incorporating the IPCC’s five reasons for concern. Integr Assess J 6(1):19–56
Hope C, Anderson J, Wenman P (1993) Policy analysis of the greenhouse effect: an application of the PAGE model. Energy Pol 15:327–338
Ingham A, Ma J, Ulph A (2007) Climate change, mitigation, and adaptation with uncertainty and learning. Energy Pol 35:5354–5369
Lecocq F, Shalizi Z (2008) Balancing expenditures on mitigation of an adaptation to climate change: an exploration of issues relevant to developing countries. 16th Annual Conference of the European Association of Environmental and Resource Economists (EAERE). Gothenburg, Sweden
Nordhaus WD (1994) Managing the global commons: the economics of climate change. MIT Press, Cambridge
Nordhaus WD (2007) The challenge of global warming: economic models and environmental policy. Yale University, New Haven
Nordhaus WD (2008) A question of balance: weighing the options on global warming policies. Yale University Press, New Haven
Nordhaus WD, Boyer J (2000) Warming the world: economic models of global warming. MIT Press, Cambridge
Nordhaus WD, Yang Z (1996) A regional dynamic general-equilibrium model of alternative climate-change strategies. Am Econ Rev 86(4):741–765
Popp D (2004) ENTICE: endogenous technological change in the DICE model of global warming. J Environ Econ Manag 48:742–768
Yohe G, Kirshen P, Knee K (2011) On the economics of coastal adaptation solutions in an uncertain world. Clim Chang 106:71–92
Acknowledgments
The authors would like to thank Tim Johnson, Richard Andrews, Doug Crawford-Brown, Jonathan Wiener, Gary Yohe, Shardul Agrawala, Rob Dellink, and Kelly de Bruin, in addition to three anonymous reviewers, for comments on earlier versions of this paper. Tyler Felgenhauer gratefully acknowledges financial research support from the Joseph L. Fisher Doctoral Dissertation Fellowship from Resources for the Future, as well as the Royster Society of Fellows at the University of North Carolina at Chapel Hill.
Disclaimer
This research was conducted while Tyler Felgenhauer was a doctoral student in the Department of Public Policy at the University of North Carolina at Chapel Hill. Any opinions expressed are those of the authors and not necessarily of the U.S. Environmental Protection Agency.
Author information
Authors and Affiliations
Corresponding author
Electronic supplementary material
Below is the link to the electronic supplementary material.
ESM 1
(DOCX 174 kb)
Rights and permissions
About this article
Cite this article
Felgenhauer, T., Webster, M. Modeling adaptation as a flow and stock decision with mitigation. Climatic Change 122, 665–679 (2014). https://doi.org/10.1007/s10584-013-1016-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10584-013-1016-9