There are two major options for climate policy, one is adaptation, a private good – which could be investment in one’s housing to reduce storm damages – the other is a public good, emission reductions, which is policy to reduce global carbon emissions.

The recent debate in climate policy has shifted towards creating an optimal policy mix between the two.

By contrast, we suggest here that emission reductions must be favoured over adaptation if we are to maximize global well-being.  

Economist’s perspective 

Most major international and national governmental bodies seem to increasingly view adaptation as an important contributor to climate policy, if not one of the main potential ‘solutions’ to our climate change problem.

For example, the European Union has placed adaptation highly on its policy agenda in the 2013 EU Strategy on Adaptation; the United Nations Environmental Program developed the National Adaptation Plan which supports countries in their national adaptations; the  Intergovernmental Panel on Climate Change (IPCC) specifically endorses adaptation together with emissionreductions as an “effective climate policy aimed at reducing the risks of climate change to natural and human systems”; and the UNFCCC promises to channel 100 billion USD for adaptation measures to developing countries through its Green Climate Fund by 2020.

Clearly, all eyes are set on adaptation.

From an economist’s perspective, several critical arguments can be forwarded against adaptation. Firstly, investments in emission reduction benefit everyone while adaptation only benefits the party that undertakes it. For the world as a whole, it is clear that if everyone invests in emission reduction, then the accumulated returns outweigh those of adaptation.

In other words, compared to the cooperative global optimum which should solely consist of emission reductions, undertaking any kind of adaptation, may it be cooperative or unilateral, induces a significant loss to global well-being. The only reason adaptation may be pursued right now is to reduce those climate impacts that are already occuring. 

The unilateral option of adaptation also reduces the incentives to invest in emission reduction and therefore imposes a negative externality on all other countries, leading to more climate change and consequently a greater need to undertake additional climate policy.

In the worst case, adaptation will simply turn out to be a white elephant. It goes without saying that this feedback cycle can lead to significant increases in global warming, to the extent that adaptation can become very costly or even impossible.

Biophysical constraints

There are also significant biophysical and financial constraints to adaptation that make adaptation a particularly weak policy option.

Biophysical constraints tend to be related to natural thresholds that, if once crossed (e.g. desertification), seriously inhibit both nature’s as well as mankind’s ability to adapt.

Financial constraints arise if, for example, poor agricultural households cannot afford to buy the seeds that new climatic conditions require, or to insure themselves sufficiently against greater climate variability; or those needing to migrate have not sufficient funds to do so.  

Finally, there are also social limits to adaptation. Who wants to live with three meter high flood barriers around the house? Which societies can really easily cope with large-scale climate migrants especially if there are strong cultural differences?   

These arguments tilt the scale away from adaptation and towards emission reductions. Additionally, they imply that accepting adaptation as part of our climate policy mix also entails that we accept climate change and its consequences for our future generations; that we accept our failure to coherently establish international cooperation in order to reduce carbon emissions; and that we accept to `agree’ on a global policy that is far from the optimal one.

Allowing a large role for adaptation simply means we failed in following the simple Kindergarten Rule of Sustainable Development – cleaning up our own mess. 

Last resort

If policy makers manage to introduce a global cap-and-trade program, or converge on the ‘right’ carbon price, or proceed with sufficiently large Nationally Appropriate Mitigation Actions, then this should take us close enough to the social optimum such that no, or only very marginal, adaptation efforts will be necessary. 

However, if policy makers are unable to agree and to commit to the globally optimal policy, then we have to accept that we as human beings are incapable of achieving the level of coordination that problems like climate change demand from us.

Only then should we allow adaptation to play a part in our climate policy, while we, at the same time, have to always remember that this is neither optimal nor, despite the IPCC’s claim,  effective or desirable. 

Instead – and this is an important change in rhetoric that must be acknowledged – adaptation is a last resort and only a testimony of mankind’s inability to cooperate.

This change in rhetoric would also make room for more stringent views on adaptation, for example that adaptation is only acceptable for countries if this does not negatively impact their emission reduction efforts. 

This Author 

Ingmar Schumacher is Professor of environmental economics at the IPAG Business School in France.

Schumacher’s paper, ‘Climate Policy Must Favor Mitigation Over Adaptation’ is forthcoming in Environmental & Resource Economics. 

Image: Brigitte Leonie, Flickr.