Adaptive Policies

Adaptive policies include measures like the building of sea walls, better man- agement of water resources, land use planning t o prevent development in vulnerable areas, and changes in the types of crops grown.

T h e effect of these measures is modeled in PAGE by defining three single values for each of the economic sectors in each of the world regions in each of the analysis years, describing the three elements of a policy that can be taken in that sector to adapt t o climate change.

The first two values increase the speed and absolute amount of global temperature change that can be tolerated in that sector; the third decreases the impact if the global temperature nevertheless exceeds this revised toler- able profile.

T h e first value defines an increase in the slope of the tolerable profile in a n impact sector in a world region, from that analysis year on. For

Impacts

With adaptive policy No impacts

, - - - Without adaptive policy

No impacts

I

2000 2050 2100

Year

Figure 5. T h e effect of an adaptive policy on tolerable global temperature change.

instance, if the slope parameter without adaptation is 0.2OC per decade, and an adaptive policy provides an extra O.l°C per decade in 2000, the tolerable climate change profile will have a slope of 0.3OC per decade from 2000 onwards.

T h e second value describes an increase in the plateau parameter in an impact sector in a world region, from the analysis year in question. T h e action of the two values together is t o alter the tolerable global temperature change profile, as shown in Figure 5.

T h e third value describes the percentage decrease in impact in an impact sector in a world region, from the analysis year in question, if the change in global temperature exceeds the tolerable global temperature change profile (possibly as modified by the first two values as shown in Figure 5). Thus if the impact weight in an impact sector without an adaptive policy were 5 billion ECU per OC, and the adaptive policy reduced this by 20% from 2010, the actual impact weight used in the calculation would be 5 billion ECU per OC before 2010, and 4 billion ECU per OC from 2010 onwards.

PAGE allows the three elements of an adaptive policy to be phased in over time. The only constraint in the model is that they cannot then be phased out again t o recoup their costs, since many of them take the form of massive capital projects, such as sea walls.

As with preventive policies, two adaptive policies are examined in this study with PAGE:

1. A policy representing "no-action" as far as adaptive measures are con- cerned. Impacts are accepted as and when they occur. This is the adaptive policy that was assumed in the calculations of the global eco- nomic impacts from the "no-action" and "aggressive" preventive policies shown in Tables 4 and 7.

2. An "aggressive" package of adaptive measures, based primarily on mit- igation of impacts due t o water resource changes and sea-level rise.'' Work is assumed t o start on the adaptive policy in the near future, and its effect is t o make a global temperature rise of 2OC tolerable in all sectors by 2000. If the global temperature rise exceeds 2OC, land use planning measures are assumed t o reduce the economic impacts for each additional OC of temperature rise by up to 90% from those shown in Table 3 by 2050.''

As with the "aggressive" preventive policy, the basic comparison is be- tween the costs of "aggressive" adaptation and the reduction in economic impacts that the "aggressive" adaptive policy would bring. Table 8 shows this comparison. At a 5% discount rate, the mean results show that the costs of adaptation, a t about half a trillion ECU, are easily justified by the

17.5 trillion ECU benefits from the reduction in economic impacts.

T h e remaining economic impacts t o 2100, if "aggressive" adaptation is introduced, have a mean value of only about 0.3 trillion ECU worldwide a t a 5% discount rate. Therefore, adaptation is very effective at reducing the worldwide economic impacts from global warming.

With such a strong excess of benefits over costs at the global level, it is no surprise that the "aggressive" adaptive policy is economically worthwhile in every region. An additional advantage is that all of the benefit from its introduction is captured in the region that incurs the costs. Adaptation is notably different from prevention in this respect.

Despite all the uncertainties, the argument for introducing an aggressive adaptive policy is very strong. Plans should be made t o start introducing sea defenses, water resource management, and land use planning measures

''The measures include the construction of sea walls, enhanced water resource manage- ment, and land use planning to restrict future development in vulnerable areas. They are described in more detail in CRU (1992a).

''Except for agriculture in the developing countries, where the pressure of population is assumed to make adaptive measures only 50% effective at all levels of temperature rise.

Table 8. Reduction in economic impacts and costs of adaptation world- wide: L'aggressive" adaptive policy versus "no actionva (trillion ECU a t a 5% discount rateb).

Low Mean High

value value value

Reduction in economic impacts 5.5 17.5 27.0

Costs of adaptationc d 0.5 1 .O

aUnder the "no-action" preventive policy.

bRounded t o the nearest half trillion ECU. In late 1992, 1 ECU is approximately equal t o US%1.

'The costs of adaptation are modeled in PAGE as follows: Three probability distributions are defined for each of the economic impact sectors. T h e first gives the annualized cost of an increase in the slope (in million 1990 ECU per OC per decade), and the second gives the annualized cost of an increase in the plateau (in million 1990 ECU per OC) of the tolerable global temperature change profile. T h e third gives t h e annualized cost of achieving a one percent drop in the impact weight in the sector. T h e cost of an adaptive policy in each sector in each year is simply given by the amount of adaptation "purchased" multiplied by these unit costs.

d ~ e s s t h a n 0.25 trillion ECU.

in all regions. Since they will take several decades t o have their full effect, their implementation should start as soon as possible.

Therefore it is against the background of the much smaller worldwide economic damage after "aggressive" adaptation (mean value of 0.3 trillion ECU t o 2100), rather than the 18.1 trillion ECU shown in Table 4, that the case for prevention has t o be made. It is clear that if "aggressive" prevention cannot be justified by the reduction in worldwide economic impacts with no adaptation, it certainly cannot be justified by pointing to a reduction in the economic impacts of 0.3 trillion ECU that remain after adaptation.

However, relying solely upon adaptation runs the risk of potentially se- vere and irreversible impacts upon society of a quite different kind from the direct economic impacts that have been considered so far. These impacts are considered next.