The Economics of Adaptation to Climate Change in Coasts and Oceans: Literature Review, Policy Implications and Research Agenda

Sea level rise and other effects of climate change on oceans and coasts around the world are major reasons to halt the emissions of greenhouse gases to the maximum extent. But historical emissions and sea level rise have already begun so steps to adapt to a world where shorelines, coastal populations, and economies could be dramatically altered are now essential. This presents significant economic challenges in four areas. (1) Large expenditures for adaptation steps may be required but the extent of sea level rise and thus the expenditures are unknowable at this point. Traditional methods for comparing benefits and costs are severely limited, but decisions must still be made. (2) It is not clear where the funding for adaptation will come from, which is a barrier to even starting planning. (3) The extent of economic vulnerability has been illustrated with assessments of risks to current properties, but these likely significantly understate the risks that lie in the future. (4) Market-based solutions to reducing climate change are now generally accepted, but their role in adaptation is less clear. Reviewing the literature addressing each of these points, this paper suggests specific strategies for dealing with uncertainty in assessing the economics of adaptation options, reviews the wide range of options for funding coastal adaption, identifies a number of serious deficiencies in current economic vulnerability studies, and suggests how market based approaches might be used in shaping adaptation strategies. The paper concludes by identifying a research agenda for the economics of coastal adaptation that, if completed, could significantly increase the likelihood of economically efficient coastal adaptation.

What Have We Learned from the Deepwater Horizon Disaster? An Economist’s Perspective

This paper outlines what we have learned about the impacts of the Deepwater Horizon (DWH) oil disaster from the economics discipline as well as what effect the DWH disaster has had on the economics discipline. It appears that what we know about the economic impact of the DWH spill today is limited, possibly because such analysis is tied up in the federal Natural Resource Damage Assessment (NRDA) process and other state-led efforts. There is evidence, however, that the NRDA process has changed over time to de-emphasize economic valuation of damages. There is also evidence that economists may be producing fewer outputs as a result of the DWH relative to scholars from other disciplines because of an apparent absence of funding for it. Of the research that has taken place, this paper provides a summary and highlights the main directions of future research. It appears that the most pressing topic is addressing the incentives and policies in place to promote a culture of safety in the offshore oil industry. Also, it appears that the most prominent, and challenging, direction of future research resulting from the DWH is the expansion of an ecosystems services approach to damage assessment and marine policy. Lea el abstracto en español 请点击此处阅读中文摘要

Climate Adaptation Finance Mechanisms: New Frontiers For Familiar Tools

Demands for mechanisms to pay for adaptation to climate risks have multiplied rapidly as concern has shifted from greenhouse gas mitigation alone to also coping with the now-inevitable impacts. A number of viable approaches to how to pay for those adjustments to roads, drainage systems, lifeline utilities and other basic infrastructure are emerging, though untested at the scale required across the nation, which already has a trillion-dollar deferred maintenance and replacement problem. There are growing efforts to find new ways to harness private financial resources via new market arrangements to meet needs that clearly outstrip public resources alone, as well as to utilize and combine public resources more effectively. To date, mechanisms are often seen through a specific lens of scale, time, and method, for example national versus local and public versus market-based means. The purpose here is to integrate a number of those perspectives and also to highlight the following in particular. Current experience with seemingly more pedestrian needs like stormwater management funding is in fact a learning step towards new approaches for broader adaptation needs, using re-purposed but existing fiscal tools. The resources raised from new large-scale market approaches for using catastrophe- and resiliency-bond-derived funds will have their use embodied and operationalized in many separate local and state projects. The invention and packaging of innovative projects—the pre-development phase—will be pivotal to better using fiscal resources of many types. Those efforts can be greatly aided or hindered by larger national and especially state government policy, regulatory and capital market arrangements. Understanding the path to integration of effort across these scales deserves much more attention. Examples are given of how federal, state and local roles are each dimensions of that frontier, how existing tools can apply in new ways and how smart project creation plays a role.