Mitigation vs Adaptation – Which path to follow under uncertainty?
By Paul Drummond, on 23 June 2015
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Climate change poses a substantial risk to human societies. Indeed, as concluded by the first Lancet Commission on Climate Change and Health and reaffirmed by the second Commission report released this week, ‘climate change is the biggest global health threat of the 21st Century’. In economic terms, if we continue on our current path, the influential 2007 Stern Review concluded that we might experience costs equivalent to reducing annual global GDP by 5-20% ‘now, and forever’. As such, it is clear that action to prevent such impacts must be taken.
Two approaches may be taken to achieve this. The first is ‘mitigation’, whereby action is taken to prevent the release of greenhouse gases that cause the issue in the first place. The second is ‘adaptation’, whereby measures are taken to reduce our vulnerability to a changing climate and the impacts this has – including on human health. From a macroeconomic perspective, the best approach to reducing the impact of climate change would be to work out the cheapest combination of mitigation and adaptation measures available to us, and implement them.
However, from our vantage point, determining just what this combination might be is, to all intents and purposes, impossible. Whilst we can make relatively informed guesses, we simply do not know how the impacts of climate change will unfold, and how the availability and cost of various mitigation and adaptation options will develop. Additionally, the rate at which future costs and benefits should be ‘discounted’, and therefore what the relative costs and benefits of action or non-action today and far in the future are, is a subject of fierce debate.
In light of this uncertainty, how should society and decision-makers respond to the threat of climate change?
Firstly, it is clear that some level of adaptation will be required to reduce the effects of a changing climate already ‘locked in’ by past and current emissions. Few estimates for the cost of already-required adaption actions exist, although the most comprehensive attempt calculates a value of $70-100 billion per year by 2050[i]. However, a number of economists and commentators argue that an adaptation-led strategy would be the cheapest way to combat potential impacts that we are not yet committed to. It is argued that, if historic trends continue, future generations will be substantially richer than us, and as such it will be relatively cheaper for them to insulate themselves from the ill effects of climate change than it would be for us to invest in preventative measures today. This is probably true for some regions, and possibly even at a global level.
However, this is a high-risk strategy. The table below illustrates the multifaceted, diverse and potentially extreme nature of climate change impacts. Some of these phenomena, particularly those in the bottom-right hand corner, cannot be adapted to at any computable cost. As we do not know the ‘dose-response’ relationship between a given level of GHG emissions and the impacts highlighted, ignoring mitigation action now in favour of adaptation in the future appears reckless. This lesson holds for all regions of the globe, as given the highly interdependent world we inhabit, even regions that might be less negatively affected by climate change itself could expect considerable economic and social disruption from those regions that were thus affected.
|Which kind of impacts?|
|Market||Non-market||Multiple stresses and socially contingent|
|What kind of climate changes?||Projection (trend)||Coastal protectionDryland lossEnergy (heating & cooling)||Heat stressWetland lossOcean acidificationEcosystem migration/termination||Displacement from coastal zonesRegional systemic impacts|
|Climate variability and (bounded) extremes||AgricultureWaterStorms||Loss of lifeBiodiversityEnvironmental services||Cascading social effectsEnvironmental migration|
|System changes and surprises||‘Tipping point’ effects on land, resources||Higher order social effectsIrreversible losses||Regional collapseFamineWar|
Would a ‘mitigation-first’ strategy then be a more prudent option?
The addition investment required in order to decarbonise the global economy to a level that would give us a significant change of remaining on a 2°C stabilisation pathway (the target agreed by all members of the UNFCCC), is relatively clear, and estimated at between $270 billion[ii] and $1 trillion[iii] per year, between now and 2050. This represents around a 30% increase on the estimated investment required on a ‘business as usual’ pathway over this time, in order to replace existing, aging infrastructure, and to provide energy access to those to which it is lacking. In a broader context, these estimates are of the order of 1% global GDP, or 10% global annual healthcare expenditure. As such, investing around 1% global GDP would seem a logical ‘insurance premium’ to prevent a potential loss of 5-20%. Indeed, prevention is better than cure.
However, mitigation actions bring a host of co-benefits that are desirable, even without the decarbonisation imperative. Broadly speaking, investments to close the substantial ‘energy efficiency gap’, and that improve energy security (reducing import dependencies and vulnerability to fossil fuel price fluctuations), and stimulate innovation and the creation of new industries and markets, are likely to boost GDP (although, various actions and investments may also have the opposing effect). In addition, evidence suggests that the co-benefits for human health, which in turn provide economic benefits, are substantial. Reduced air pollution and increased active travel, for example, would have substantially reduce pressure on existing healthcare budgets – the subject of another blog post in this series. Indeed, whilst climate change is the biggest global health threat of the 21st Century, action to combat it is likely to be the greatest global health opportunity of the 21st Century.
[i] World Bank (2010) The Costs to Developing Countries of Adapting to Climate Change: New Methods and Estimates, Washington DC.
[ii] The Global Commission of Economy and Climate (2014) The New Climate Economy: Better Growth, Better Climate, New York
[iii] IEA (2012) World Energy Outlook, Paris, IEA