7. Adaptation costs

Some amount of climate change is inescapable, and adaptation measures will be required. What are the costs of adaptation? How does adaptation relate to mitigation, as part of a policy response?

Did the Stern Review underestimate U.S. and global climate damages?
Frank Ackerman, Elizabeth A. Stanton, Chris Hope and Stephane Alberth
Energy Policy (2009) (accepted for publication).

One controversy surrounding the Stern Review concerns the magnitude of the expected impacts of climate change. Stern’s estimates, based on the PAGE2002 model, were greater than those produced by many other models, leading some critics to suggest that Stern had inflated his damage figures. We reached the opposite conclusion in a study of the costs to the U.S. of inaction on climate change.

This article describes our revisions to the PAGE estimates, and explains why the Stern Review underestimates U.S. and global damages. One large part of the underestimate is due to the PAGE/Stern assumptions about the availability of almost costless adaptation in developed countries. Stern’s estimates from PAGE2002 imply that mean business-as-usual damages in 2100 would represent just 0.4 percent of GDP for the United States and 2.2 percent of GDP for the world. Our revisions and reinterpretation of the PAGE model imply that climate damages in 2100 could reach 2.6 percent of GDP for the United States and 10.8 percent for the world.

Fair adaptation to climate change
Jouni Paavola and W. Neil Adger
Ecological Economics (2006) 56(4): 594-609.

This article identifies social justice dilemmas associated with the necessity to adapt to climate change, examines how they are currently addressed by the climate change regime, and proposes solutions to overcome prevailing gaps and ambiguities. We argue that the key justice dilemmas of adaptation include responsibility for climate change impacts, the level and burden sharing of assistance to vulnerable countries for adaptation, distribution of assistance between recipient countries and adaptation measures, and fair participation in planning and making decisions on adaptation. We demonstrate how the climate change regime largely omits responsibility but makes a general commitment to assistance. However, the regime has so far failed to operationalize assistance and has made only minor progress toward eliminating obstacles for fair particistion. We propose the adoption of four principles for fair adaptation in the climate change regime. These include avoiding dangerous climate change, forward-looking responsibility, putting the most vulnerable first and equal participation of all. We argue that a safe maximum standard of 400–500 ppm of CO₂ concentrations in the atmosphere and a carbon tax of $20–50 per carbon equivalent ton could provide the initial instruments for operationalising the principles.