The Economics of Adaptation to Climate Change in Developing Countries. George Washington University May 2011

Transcription

1 The Economics of Adaptation to Climate Change in Developing Countries George Washington University May 2011

2 Theory

3 What is Adaptation? Short run and long run changes actors make in response to changing climate Changes can be targeted at reducing potential damages (damage reduction) Changes can be targeted at seizing new opportunities (increasing benefits)

4 Are all adaptations desirable? Desirable adaptations provide benefits that exceed their cost society should encourage only efficient adaptation Optimal adaptation maximizes net benefits Climate proofing taking actions until there are no residual damages is generally inefficient involves many projects that would fail a cost benefit analysis increases the damages of climate change

5 How do adaptation and mitigation interact? Optimal adaptation reduces need for mitigation Optimal mitigation reduces need for adaptation Best strategy is to do both One reason to study adaptation is to know what mitigation is needed

6 Public or Private? Private (autonomous) adaptations are actions taken by single actors for their own benefit Public (collective) adaptations are actions taken for the benefit of many actors (public good) Unlike mitigation, actors have an incentive to conduct efficient private adaptation Markets will likely under provide public adaptations

7 Adaptation Capacity Ability to perform efficient adaptations Property rights (ownership) necessary to give correct incentives for private actors to adapt problems with common property Good governance necessary for governments to provide public adaptation efficiently Adaptation capacity is not necessarily a function of income, access to capital, or technology

8 Can poor adapt? Poor can do private adaptation efficiently Household farms may adapt better than commercial farms because more diversified (not specialized) May help poor adapt for equity reasons but need to be careful about encouraging efficient adaptation

9 Anticipatory or Reactive Adaptation? Anticipatory action done in advance of climate change Reactive actions taken after climate changes Long run responses take long lead times and are more likely to be anticipatory Climate uncertainty will likely cause most adaptation to be reactive (exception sea level rise)

10 Centralized or Local? Whereas mitigation plans need to be centralized to be globally effective, adaptation is inherently local Ideal adaptation depends on local climate and local conditions patchwork rather than blanket

11 Timing Adaptations done too soon are more costly and can be damaging Adaptations done too late may have lower costs but do not prevent potential damages Critical to get timing right

12 Specific Development Concerns? Lack of private property rights Poor governance Poor information about climate and choices Equity

13 What role for local government? Manage public adaptations Provide information about climate change and choices Reinforce property rights

14 What role for international governments/agencies? Share information Support local governance with technical skills and finance

15 What adaptations are needed, when, and where? Answer lies in empirical analysis of options in each sector and local area (climate and other local conditions) Agriculture, sea level rise, energy (coolingheating) have been studied most Public health and conservation studied least Surprisingly little has been studied

16 Empirical Research

17 Design adaptation research Study changes in climate Climate changed little in modern times Other factors change orders of magnitude more Study changes in weather Plenty of variation Hard to anticipate or react to Simulation studies Use laboratory experiments to detect sensitivity Predict behavior by climate Study climates across earth How does behavior differ across climate zones Hard to control for unwanted variation

18 Agriculture Farm type is sensitive to climate change Crop choice and livestock choice sensitive to both temperature and precipitation in studies in Africa, China, and South America

19 Impact of Climate Change in 2100 on Farm Type in Latin America 25.00% CCC 20.00% Frequency Change 15.00% 10.00% 5.00% 0.00% -5.00% % % Crop Only Rainfed Crop Only Irrigated Mixed Rainfed Mixed Irrigated CCSR PCM Livestock Only Climate scenario

20 Crop Switching Yield (kg/ha) corn soybean wheat millet temperature

21 Current allocation of African Sheep

22 African Sheep with CCC climate

23 Sea level rise Height Sea Walls Sea Level Rise Time

24 Energy Energy Costs Total Energy Heating Cooling Temperature

25 Nonmarket Adaptations Public health responses to potential illnesses and heat stress Retreat options for marshes and mangroves against sea level rise Flexible conservation zones for species migration to new habitat

26 Externalities Climate change may exacerbate some externalities Warming increases secondary ozone pollution formation (requiring tighter regulations on emissions) More intense precipitation events will increase flooding (requiring land use regulations and systematic flood control)

27 Policy Conclusions

28 Policy Suggestions Do not confuse adaptation and mitigation Support conditions for efficient private adaptation Governments should focus on funding public adaptation Put funds where net benefits are the highest Public health Conservation hot spots

29 What adaptation can be done now? Planning and research Study adaptation to determine mitigation Study what adaptation will be needed Institutional changes: improve public management and privatize resources (land, water, fisheries) Help developing countries grow and become less dependent on climate sensitive economic sectors namely agriculture

30 Additionality Focus on additionality concerns hampers efforts to fund projects too difficult to parse out what is adaptation versus development Recommend new focus on integration between climate efforts and development