New publication: Climate Policy Must Favour Mitigation Over Adaptation

I am very happy to announce that my article entitled “Climate Policy Must Favor Mitigation Over Adaptation” is forthcoming in the journal Environmental & Resource Economics. The main message is the following:

In climate change policy, adaptation tends to be viewed as being as important as mitigation. In this article we present a simple yet general argument for which mitigation must be preferred to adaptation at the global level. The argument rests on the observation that mitigation is a public good while adaptation is a private one. We show that the more one teases out the public good nature of mitigation, the lower will be the incentives to invest in the private good adaptation while it increases a policy maker’s incentives to invest in the public good mitigation. Conclusively, private adaptation yields a significant loss to global welfare. We then discuss what this implies for the current state of the art literature and what should be the lesson for future research.

You can take a look at the article HERE. In the article I argue that the economic literature has mismodeled the trade-off between mitigation and adaptation by not properly distinguishing between mitigation as a public good while adaptation must be a private one. Once modeled like this, then one immediately obtains that, at the social optimum, mitigation will be positive while no adaptation will be undertaken. Simply stated, a euro invested in mitigation benefits the whole world, while a euro invested in adaptation only benefits a smaller group of people (e.g. a household in the case of air conditioning, or a commune in the case of a dam). Society would thus be better off to focus as much as possible on mitigation.

Hence, while the  Intergovernmental Panel on Climate Change (IPCC) notes that “[e]ffective climate policy aimed at reducing the risks of climate change to natural and human systems involves a portfolio of diverse adaptation and mitigation actions (very high confidence)”, the results in my article suggest that this statement should be rephrased to read “[e]ffective climate policy aimed at reducing the risks of climate change to natural and human systems must primarily consist of mitigation actions.”

A policy-oriented version in the online magazine The Ecologist can be found HERE. In brief, the main but too often neglegted point is this one:

“From an economist’s perspective, several critical arguments can be forwarded against adaptation. Firstly, investments in emission reduction benefit everyone while adaptation only benefits the party that undertakes it. For the world as a whole, it is clear that if everyone invests in emission reduction, then the accumulated returns outweigh those of adaptation. In other words, compared to the cooperative global optimum which should solely consist of emission reductions, undertaking any kind of adaptation, may it be cooperative or unilateral, induces a significant loss to global well-being. The only reason adaptation may be pursued right now is to reduce those climate impacts that are already occuring.”

P.S.: The T-Shirt in the picture is size M. I will send it to anyone for free if that person will (visibly) wear it at a forthcoming IPCC or UN conference.

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