How Harmful are Adaptation Restrictions

30 Pages Posted: 10 Aug 2009

See all articles by Rob Dellink

Rob Dellink

Wageningen UR - Environmental Economics and Natural Resources Group; Organization for Economic Co-Operation and Development (OECD)

Kelly C. de Bruin

Wageningen University

Date Written: August 6, 2009

Abstract

The dominant assumption in economic models of climate policy remains that adaptation will be implemented in an optimal manner. There are, however, several reasons why optimal levels of adaptation may not be attainable. This paper investigates the effects of suboptimal levels of adaptation, i.e. adaptation restrictions, on the composition and level of climate change costs and on welfare. Several adaptation restrictions are identified and then simulated in a revised DICE model, extended with adaptation (AD-DICE). We find that especially substantial over-investment in adaptation can be very harmful due to sharply increasing marginal adaptation costs. Furthermore the potential of mitigation to offset suboptimal adaptation is investigated. When adaptation is not possible at extreme levels of climate change, it is cost-effective to use more stringent mitigation policies in order to keep climate change limited, thereby making adaptation possible. Furthermore not adjusting the optimal level of mitigation to these adaptation restrictions may double the costs of adaptation restrictions, and thus in general it is very harmful to ignore existing restrictions on adaptation when devising (efficient) climate policies.

Keywords: Integrated Assessment Modelling, Adaptation, Climate Change

JEL Classification: Q25, Q28

Suggested Citation

Dellink, Rob and de Bruin, Kelly C., How Harmful are Adaptation Restrictions (August 6, 2009). FEEM Working Paper No. 58.2009, Available at SSRN: https://ssrn.com/abstract=1444809 or http://dx.doi.org/10.2139/ssrn.1444809

Rob Dellink

Wageningen UR - Environmental Economics and Natural Resources Group ( email )

P.O. Box 8130
Wageningen, 6700 EW
Netherlands
+31 (0)317 4 82009 (Phone)
+31 (0)317 4 84933 (Fax)

HOME PAGE: http://www.sls.wau.nl/enr/staff/dellink/

Organization for Economic Co-Operation and Development (OECD) ( email )

Paris
France

HOME PAGE: http://www.oecd.org/env/cc/econ

Kelly C. De Bruin (Contact Author)

Wageningen University ( email )

Hollandseweg 1
6706KN
Netherlands

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