ECONOMIC ASPECTS OF ADAPTATION TO CLIMATE CHANGE: INTEGRATED ASSESSMENT MODELLING OF ADAPTATION COSTS AND BENEFITS

This report seeks to inform critical questions with regard to policy mixes of investments in adaptation and mitigation, and how they might vary over time. This is facilitated by examining adaptation within global Integrated Assessment Modelling frameworks. This report develops and applies a framework for the explicit incorporation of adaptation in Integrated Assessment Models (IAM). To demonstrate the approach a framework for incorporating adaptation as a policy variable was developed for two IAMs -- the global Dynamic Integrated model for Climate and the Economy (DICE) and its regional counterpart, the Regional Integrated model for Climate and the Economy (RICE). These modified models -- AD-DICE and AD-RICE -- are calibrated and then used in a number of policy simulations to examine the distribution of adaptation costs and the interactions between adaptation and mitigation. The analysis presented suggests that a good adaptation policy matters especially when suboptimal mitigation policies are implemented.