Samuel Fankhauser

Weathering climate change: some simple rules to guide adaptation decisions

This paper discusses some of the elements that may characterise an efficient strategy to adapt to a changing climate. Such a strategy will have to reflect the long time horizon of, and the prevailing uncertainties about, climate change. An intuitively appealing approach therefore seems to be to enhance the flexibility and resilience of systems to react to and cope with climate shocks and extremes, as well as to improve information. In addition, in the case of quasi-irreversible investments with a long lifetime (e.g. infrastructure investments, development of coastal zones), precautionary adjustments may be called for to increase the robustness of structures, or to increase the rate of depreciation to allow for earlier replacement. Many of these measures may already have to be considered now, and could be worthwhile in their own right, independent of climate change considerations.

Economic aspects of adaptation to climate change : costs, benefits and policy instruments

When the Victoria and Albert Museum in London mounted an exhibition on the history of the British Empire in the summer of 2001, it carefully stage managed the relationship between domestic Victorian England and the far-flung reaches of its empire. Passing from rooms devoted to the class makeup of the British mother country through large double doors leading to “The World,” spectators at “The Victorian Vision” were treated to a consumable vision of empire that was, in Antoinette Burton’s words, “quite literally cordoned off from the rest of the nation.” Burton, a key figure in the paradigm shifting and provocative work that has been carried out under the banner of the “new imperial history,” has devoted much of her prodigious critical energy toward breaking down those barriers between a domestic Britain purged of any taint of racial or imperial politics and an empire construed as geographically and politically separate from orthodox British history. Empire in Question brings together fourteen of Burton’s essays, from 1994 to 2006, as well as new writings from Burton that bookend the collection, pointing out future directions for conceptualizing Britain’s empire in the wake of 9/11. It is an essential collection for anyone working in the history or culture of British imperialism and an invaluable pedagogical resource for teachers at any level eager to help students navigate the legacy of a British empire that continues to be packaged and repackaged for consumption in popular and high culture, in museums and on television, and in university syllabi across a range of fields. The stakes of Burton’s critical interventions are particularly clear in North American undergraduate British history classrooms, where students come looking, as Burton laments, for “islands of whiteness in what they often perceive of as a sea ofClimate change poses a serious challenge to social and economic development. Efforts to reduce greenhouse gas emissions need to move hand in hand with policies and incentives to adapt to the impacts of climate change. How much adaptation might cost, and how large its benefits might be, are issues that are increasingly relevant both for on-the-ground projects and in national and international contexts. This report provides a critical assessment of adaptation costs and benefits in key climate sensitive sectors, as well as at national and global levels. It moves the discussion beyond cost estimation to the potential and limits of economic and policy instruments - including insurance and risk sharing, environmental markets and pricing, and public private partnerships - that can be used to motivate adaptation actions. The report cautions that recent headline estimates on the global price-tag for adaptation face serious limitations. In addition, the few available studies have tended to stack upon the assumptions made in preceding studies. Therefore, a consensus, even in order of magnitude terms, is premature and may be misleading. Costing or raising large sums of money to finance adaptation is clearly important, but will not alleviate the challenge of ensuring that individuals, businesses, governments and civil society make timely, well-informed, and efficient adaptation decisions. The report therefore also calls for a raft of policy instruments to establish the right incentives to influence such decisions. Setting up the right incentive and partnership structures to promote adaptation, however, will be a daunting task. Adaptation to climate change as a public policy challenge has only just emerged.

The scope for adaptation to climate change: what can we learn from the impact literature?

Neither the costs nor the benefits of adaptation to climate change have been systematically studied so far. This paper discusses the extent to which the vast body of literature on climate change impacts can provide insights into the scope and likely cost of adaptation. The ways in which the impacts literature deals with adaptation can be grouped into four categories: no adaptation, arbitrary adaptation, observed adaptation (analogues), and modeled adaptation (optimization). All four cases are characterized by the simple assumptions made about the mechanisms of adaptation. No or only scant attention is paid to the process of adapting to a new climate. Adaptation analysis has to acknowledge that people will be neither dumb nor brilliant at adapting. They are likely to see the need for change, but may be constrained in their ability to adept or in their comprehension of the permanence and direction of change.

Protection versus Retreat: The Economic Costs of Sea-Level Rise:

The author analyses the relative role of protection (or damage mitigation) expenditures within the total costs associated with raised sea levels induced by climate change. A rule of thumb is derived to approximate the optimal level of protection. Economic efficiency requires that protection expenditures are designed such that the sum of protection costs plus remaining land-loss damage is minimised. The optimal protection level will depend on the relative importance of dryland loss compared with the costs of accelerated wetland loss plus protection expenditures. This framework is then used to estimate the damage-cost functions associated with a sea-level rise for the countries of the OECD.

On the representation of impact in integrated assessment models of climate change

The paper provides an overview of attempts to represent climate change impact in over twenty integrated assessment models (IAMs) of climate change. Focusing on policy optimization IAMs, the paper critically compares modeling solutions, discusses alternatives and outlines important areas for improvement. Perhaps the most crucial area of improvement concerns the dynamic representation of impact, where more credible functional forms need to be developed to express time‐dependent damage as a function of changing socio‐economic circumstances, vulnerability, degree of adaptation, and the speed as well as the absolute level of climate change.

Extensions and alternatives to climate change impact valuation: on the critique of IPCC Working Group III's impact estimates

The paper discusses valuation issues in the context of climate change impact estimation. Issues addressed are aggregation of damage costs over diverse regions (particularly equity-weighting), differentiation of per-unit values, willingness to pay versus willingness to accept compensation as a basis for valuation, and accountability for impacts. Numerical illustrations show that the damage cost estimates are quite sensitive to the assumptions made on these issues.

Spending Adaptation Money Wisely

The discussions about adaptation finance have mostly been about process: how money should be raised and how adaptation spending should be governed and monitored. This paper seeks to move the focus of the debate back towards the substance of adaptation by asking what “good adaptation” in developing countries would look like. We argue that the best use of funds in the short term may be for “soft”, or less tangible developmental activities that increase adaptive capacity. Building a minimum level of adaptive capacity everywhere is central to efficient, effective and equitable adaptation and yields immediate benefits irrespective of future climate regimes. We discuss a number of operational challenges in delivering this kind of adaptation, including a preoccupation with additionality – which makes the integration of adaptation and development harder – and a preference for “concrete” and more readily visible adaptation projects. We leave open the question of whether and how the adaptation regime that is emerging from the Cancun Agreements will be able to deliver wise adaptation decisions, but our analysis recognizes that further institutional development is required.

Combining Multiple Climate Policy Instruments: How Not to Do It

Putting a price on carbon is critical for climate change policy. Increasingly, policymakers combine multiple policy tools to achieve this, for example by complementing cap-and-trade schemes with a carbon tax, or with a feed-in tariff. Often, the motivation for doing so is to limit undesirable fluctuations in the carbon price, either from rising too high or falling too low. This paper reviews the implications for the carbon price of combining cap-and-trade with other policy instruments. We find that price intervention may not always have the desired effect. Simply adding a carbon tax to an existing cap-and-trade system reduces the carbon price in the market to such an extent that the overall price signal (tax plus carbon price) may remain unchanged. Generous feed-in tariffs or renewable energy obligations within a capped area have the same effect: they undermine the carbon price in the rest of the trading regime, likely increasing costs without reducing emissions. Policymakers wishing to support carbon prices should turn to hybrid instruments — that is, trading schemes with price-like features, such as an auction reserve price — to make sure their objectives are met.

The economic costs of global warming damage: A survey☆

Abstract This paper provides an overview on literature dealing with an economic assessment of expected global warming damage. While a relatively large body of literature exists on other economic aspects of global warming, in particular the costs of carbon abatement, the question of greenhouse damage valuation has gained little attention so far. The first part of the paper surveys the results of existing analyses on the costs of global warming. The second part discusses the main shortcomings of these studies and the main problems faced by researchers in this area.

From adaptation to climate-resilient development: The costs of climate-proofing the Millennium Development Goals in Africa

Socio-economic development and adaptation to climate change are closely intertwined. Adaptation is sometimes described as climate-resilient development or development under a hostile climate. In support of this view, this paper estimates the combined cost of meeting and at the same time ‘climate-proofing’ the millennium development goals (MDGs) for Africa. Treating adaptation and development in an integrated way helps to better understand financing requirements analytically and, more importantly, to implement the requisite measures more effectively as part of an integrated development programme. We find that the external financing needed for ‘climate-resilient’ MDGs is about 40 per cent higher than the external financing for the MDGs alone – up to USD100 billion a year for the next decade, compared with USD72 billion a year for the MDGs alone. This estimate is indicative only and based on fairly cursory aggregate data. The next challenge would be to apply the integrated adaptation and development frameworks to concrete development strategies at the country level.