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CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 1 Dottorato Climate Change and Policy Modelling Assessment: Adaptation in (CGE) Modelling Francesco.

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Presentation on theme: "CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 1 Dottorato Climate Change and Policy Modelling Assessment: Adaptation in (CGE) Modelling Francesco."— Presentation transcript:

1 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 1 Dottorato Climate Change and Policy Modelling Assessment: Adaptation in (CGE) Modelling Francesco Bosello

2 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 2 Defining adaptation (1) Adjustment in ecological, social, or economic systems in response to actual or expected climatic stimuli, and their effects or impacts. […] refers to changes in processes, practices or structures to moderate or offset potential damages or to take advantages of opportunities associated with changes in climate (IPCC TAR, 2001) Process by which strategies to moderate, cope with and take advantage of the consequences of climate events are enhanced, developed and implemented (UNDP, APF, 2005). Policies, practices, and projects with the effect of moderating damages and/or realising opportunities associated with climate change (EEA, 2005) Institutional definitions

3 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 3 Defining adaptation (2) Process through which people reduce the adverse effects of climate on their health and well-being, and take advantage of the opportunities that their climatic environment provides (Burton, 1992) Any adjustment, whether passive, reactive or anticipatory, that is proposed as a means for ameliorating the anticipated adverse consequences associated with climate change (Stakhiv, 1993) Changes in a system in response to some force or perturbation, in our case related to climate (Smithers and Smit, 1997) Definitions from the science

4 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 4 Defining adaptation (3) There are some key concepts Systemic process or transformation Through space and time Reducing(increasing) negative(positive) impacts if successful viceversa if unsuccessful (maladaptation) Triggered by a climatic pressure

5 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 5 Classifying adaptation (1) The subject of adaptation: Who or what adapts Ecological, social and/or economic systems. These changes can be the result of natural responses and in this case they usually involve organisms or species, or of socio-economic or institutional reactions in which case they are undertaken by individual or collective actors, private or public agents. The object of adaptation: What they adapt to Adaptive responses can be induced either by changes in average conditions or by changes in variability of extreme events. While in the first case the change is slow and usually falls within the coping range of systems, in the second case changes are abrupt and outside this coping range (Smit and Pilifosova, 2001).

6 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 6 Classifying adaptation (2) How Adaptation Occurs Several criteria can be used to identify the different adaptation processes (see e.g. Smit et al. 1999; Klein and Tol, 1997; Fankhauser et al., 1999; IPCC, 2001). Concept or Attribute PurposefulnessAutonomous Planned TimingAnticipatory Responsive Temporal ScopeShort term Long term Spatial ScopeLocalised Widespread Function/EffectsRetreat – accommodate – protect – prevent FormStructural – legal – institutional Valuation of performanceEffectiveness-efficiency-equity Source: adapted from Smit et al. 1999

7 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 7 Classifying adaptation (3) Autonomous Adaptation: natural automatic response to a shock. Also socio-economic systems react partly autonomously. There are substitution possibilities triggered by price (scarcity) signals. Planned Adaptation: strategies apt to alleviating the damage once it is (or will be) materialized via proper modifications of the impacted socio- economic-environmental system. Undertaken by public agencies – agents. Objectives of planned adaptation (Klein and Tol, 1997) : increasing the robustness of infrastructural design and long term investment, increasing the flexibility of vulnerable managed system, enhancing the adaptability of vulnerable natural systems, reversing trends that increase vulnerability (maladaptation), improving societal awareness and preparedness.

8 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 8 A short history of adaptation (1) Art. 2 objectives "...achieve [stabilization of greenhouse gas concentrations] within a time frame to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner. (UN, 1992). Art. 3.3: The Parties should take precautionary measures to anticipate, prevent or minimise the causes of climate change and mitigate its adverse effects. UNFCCC (Rio Earth Summit 1992) not a new issue indeed…

9 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 9 A short history of adaptation (2) Article 4.1(b): parties are committed to formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing […] measures to facilitate adequate adaptation to climate change. Article 4.1(e): all parties should cooperate in preparing for adaptation to the impacts of climate change and to develop and elaborate appropriate and integrated plans for coastal zone management, water resources and agriculture, and for the protection and rehabilitation of areas, particularly in Africa, affected by drought and desertification, as well as floods.

10 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 10 A short history of adaptation (3) Kyoto Protocol (1997) Art. 10: All parties […] shall […] formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to […] facilitate adequate adaptation to climate change Article 12.8: The Conference of the Parties […] shall ensure that a share of the proceeds from certified project activities is used to […] assist developing country Parties that are particularly vulnerable to the adverse effect of climate change to meet the cost of adaptation

11 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 11 A short history of adaptation (4) However until the end of 90s main policy & research focus was on mitigation (e.g. see 1995 IPCC SAR) Prudential and politically correct Mitigation easy to investigate Then Awareness of climate inertias Difficulty of effective implementation of mitigation policies (Kyoto) Interest on adaptation (2001 TAR, 2007 FAR) Standard tools for economic policy (command and control and/or market based mech.s) & standard analysis could be applied to mitigation More of an issue for developing countries

12 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 12 Where do we stand now (1) IPCC TAR (2001) [p. 779] …Adaptation to climate change has the potential to substantively reduce many of the adverse impacts of climate change and enhance beneficial impacts - though neither without cost nor without leaving residual damages… An increasing number of researches, but still far from conclusive, highlights a strong potential for adaptation to reduce climate change adverse effects see e.g. the vast literature on coastal protection or on agriculture

13 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 13 Where do we stand now (2) …Current knowledge of adaptation and adaptive capacity is insufficient for reliable predictions of adaptations; it also is insufficient for rigorous evaluation of planned adaptation options, measures and policies of governments (IPCC 2001, TAR) Nevertheless it is recognised that: …more quantitative information on the costs and benefits of economy- wide adaptation is required… (the Stern review, 2006) Only a few credible estimates are now available of the cost of adaptation (in the Developing countries) …and… highly speculative (the Stern Review 2006) At a global or international level, defining a socially, economically and environmentally justifiable mix of mitigation, adaptation and development remains difficult and a research need (IPCC 2007, FAR)

14 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 14 Adaptation in modelling Exhogenous adaptation: the Hopes PAGE (2002) model Select a mitigation and adaptation policy Global and regional temperature Costs of mitigation Costs of adaptation ImpactsCosts Source: Hope (2006)

15 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 15 Adaptation in modelling Tolerability Plateau Slope Damage Reduction Source: Hope (2006) Adaptation can achieve an increase in the tolerable t increase (plateau + slope effect) and a reduction in damage °C

16 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 16 Adaptation in modelling Source: Hope (2006) Default adaptation strategy in PAGE2002

17 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 17 Adaptation in modelling Source: Hope (2006) Costs of default adaptation strategy in economic sector, PAGE 2002 minmodemax 1 °C rise in tolerable temp % reduction in impact $US (2000) billion/year

18 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 18 Adaptation in modelling Endogenous adaptation as a flow, DeBruin et al. (2007) D = CC damage RD = residual damage GD = gross damage PC = adaptation cost P = adaptation rate Y = GDP TE = temperature

19 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 19 Adaptation in modelling Restrictions: 0.3 < P(t=2130) < % of GDP < PC(t=2130) < 0.5% of GDP and 7% of TD < PC(t=2130) < 25% of TD To be estimated

20 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 20 Adaptation in modelling Endogenous adaptation as a stock. Bosello (2006) Productive capital accumulation Gross production Obj. Funct. Knowledge stock accumulation Adaptation capital accumulation Emissions The double role of knowledge: productivity increasing and emission intensity decreasing

21 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 21 Adaptation in modelling Ususal output allocation function Link gross – net output Net (of CC damage and environmental Policies) output Abatement costs (as forgone GDP) depending (+) on abatement rates Climate change damages (as forgone GDP) depending (+) on temperature and (-) on adaptation capital

22 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 22 Adaptation: compendium of results. (Hope, 2006) At given assumptions aggressive adaptation policies could be easily justified as well: for instance, at a 5% discount rate, the mean cost of US $ 0.5 trillion implied by an ambitious adaptation strategy implemented between 1990 and 2100, were outweighed by the US $ 17.5 trillion benefits from the reduction in economic impacts.

23 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 23 Adaptation: compendium of results. (De Bruin et al., 2006) Climate change damages

24 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 24 Adaptation: compendium of results. (Bosello, 2006)

25 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 25 Adaptation: compendium of results. (Bosello, 2006) Mitigation and R&D investment start at the beginning, adaptation later Mitigation, R&D investment and adaptation (M+A+R)

26 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 26 Autonomous adaptation: CGE modelling It can intrinsically highlight the role of autonomous adaptation (i.e. economic substitution possibilities) as long as the difference between direct and indirect costs can be shown. Extreme care in the interpretation (and communication) of results. The big issues here: The geographical scale effect: large aggregations conceal hot spots Stock vs flows (do not compare pears with apples)!

27 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 27 Autonomous adaptation: CGE modelling Sometimes it is embedded in the model. It is nothing else than the very functioning of the general equilibrium structure of the model with all its interconnected adjustments (see SLR example) In some other cases also autonomous adaptation need to be modelled. This is the case of climate change impacts on health or tourism flows (but is this really adaptation or impact?) when endogenous (in this case demand) variables have to be modified

28 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 28 Autonomous adaptation: CGE modelling Example: Bosello et al. (2007), Economy wide estimations of climate change impacts Sea level rise

29 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 29 Autonomous adaptation: CGE modelling, SLR Inputs to the CGE modelOutputs from the CGE model Reference Year 2050: % changes wrt baseline

30 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 30 Autonomous adaptation: CGE modelling, SLR

31 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 31 Planned adaptation and CGE modelling. The typical approach is the if then one. That is: a scenario with climate change impacts and without adaptation is compared with a scenario with adaptation. Adaptation is one (or more) specific planned adaptation strategy ad hoc modelled and a lower climate change impact is imposed. Thus we return to the shortcoming of not having an endogenously defined optimal level of adaptation In addition, when stock and flow variables at a time are concerned by climate change and adaptation, results are difficult to interpret.

32 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 32 Planned adaptation and CGE modelling. Bosello, F., Roson, R. and Tol, R.S.J. (2007), Economy wide estimates of the implications of climate change: sea level rise, Environmental and Resource Economics, 37. Example

33 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 33 Modelling coastal protection The amount of savings by regional households adjusts endogenously. In each region regional savings increase uniformly to meet the increased investment demand. This additional investment increases (exogenously) regional investment. (Cost of coastal protections from Nicholls) Given that income is allocated between savings, private and public expenditure, more savings => less consumption. The sum of the three shares cannot exceed 1. The idea: coastal protection implies additional investment need.

34 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 34 CGE modelling and planned adaptation: SLR Equation(linear)RORGLOBAL # global supply of cap. goods, or global rental rate on investment (HT 59)# (all,r,REG) qcgds(r)= investment(r); (8) New exhogenous variables (8) Endogenous variables deleted (equations for cgds)

35 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 35 CGE modelling and planned adaptation: SLR EQUATION (Linear) DEVSAVE1 (all,r,USA1) (all,i,EU1) qsave(r)=qsave(i); EQUATION (Linear) DEVSAVE2 (all,r,EU1) (all,i,JPN1) qsave(r)=qsave(i); EQUATION (Linear) DEVSAVE3 (all,r,JPN1) (all,i,EEFSU1) qsave(r)=qsave(i); EQUATION (Linear) DEVSAVE4 (all,r,EEFSU1) (all,i,CHIND1) qsave(r)=qsave(i); EQUATION (Linear) DEVSAVE5 (all,r,CHIND1) (all,i,EEx1) qsave(r)=qsave(i); EQUATION (Linear) DEVSAVE6 (all,r,EEX1) (all,i,RoA11) qsave(r)=qsave(i); EQUATION (Linear) DEVSAVE7 (all,r,RoA11) (all,i,RoW1) qsave(r)=qsave(i); (7 ??) New endogenous variables

36 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 36 CGE modelling and planned adaptation: SLR Equation DISTPARSUM #sum of the distribution parameters# (all,r,REG) DPARSUM(r)*dpsum(r)=DPARPRIV(r)*dppriv(r)+DPARGOV(r)*dpgov(r) + DPARSAVE(r)*dpsave(r); From exogenous to endogenous From endogenous to endogenous

37 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 37 CGE modelling and planned adaptation: SLR Full Protection: Selected Results InputsOutputs = highest (absolute) values

38 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 38 CGE modelling and planned adaptation: SLR GDP: No Protection vs Full Protection (2050)

39 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 39 CGE modelling and planned adaptation: SLR Utility: No Protection vs Full Protection

40 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 40 SLR, optimal adaptation (the PESETA project 2007) A high SLR scenario: optimal protection levels for the EU from the DIVA model

41 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 41 SLR, optimal adaptation (the PESETA project 2007) A high SLR scenario: GDP no adaptation vs optimal adaptaton

42 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 42 CGE modelling and planned adaptation: SLR

43 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 43 CGE modelling and planned adaptation: SLR

44 CENTRO EURO-MEDITERRANEO PER I CAMBIAMENTI CLIMATICI 44 CGE modelling and planned adaptation: SLR


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