How much does it cost to adapt to climate change?

Humankind is building up atmospheric stocks of greenhouse gases which, on relevant timescales, are effectively irreversible. There is uncertainty about how damaging such stocks will be, but as climate change research advances we will get better information about these risks in the future. For economists and others, this raises the crucial timing question of how this affects that rate at which we build up the stocks. With conventional rules of costbenefit economics, one should delay investment, slowing the accumulation of greenhouse gases and increasing mitigation. Professor Alistair Ulph from Southampton University’s Department of Economics is leading a project that explores the theoretical issues involved with estimating the costs of adapting to climate change. The project starts with a critical review of the literature that addresses a number of the criticisms of using cost-benefit analysis to study responses to climate change. It will focus particularly on the inclusion of cost-benefit analysis to assess the correct timing of investments in adaptation strategies, based on current expectations and change as better information becomes available. In particular, the project will focus on key questions for the economics of climate change: irreversibility; uncertainty; and learning. The second stage of the project extends the analysis to case studies in the UK water industry, where increased storms and droughts are expected to vary water supply and water demand. The case study links this research to work by Professor Nigel Arnell who is co-manager of the Tyndall Centre’s ‘adapting to climate change’ research theme. His work is aiming to produce practical guidelines for the water sector in assessing options and risk for their adaptation strategies to climate change. A workshop for researchers and policymakers will discuss the outcomes of this project.

Professor Alistair Ulph from Southampton University’s Department of Economics is leading a Tyndall Centre project that explores the theoretical issues involved with estimating the economic costs of adapting to climate change

More information
Contact the lead investigator of Project T3.34 (Theory and practice of economic analysis of adaptation): Professor Alistair Ulph Department of Economics University of Southampton Southampton SO17 1BJ Tel: 02380 592544 amu@soton.ac.uk Other researchers involved in this project are: Alan Ingham and Professor Nigel Arnell, Tyndall Centre South and University of Southampton Professor Kerry Turner and Dr Neil Adger, CSERGE, University of East Anglia Dr Jonathan Köhler, Tyndall Centre HQ and Department of Applied Economics, University of Cambridge

Useful Websites
Technical change for long term economic models. Tyndall Working Paper 15 www.tyndall.ac.uk/publications/working_papers/wp15_summary.shtml How high are the costs of Kyoto for the US economy? Tyndall Working Paper 4 www.tyndall.ac.uk/publications/working_papers/wp4_summary.shtml Economics and the Kyoto Protocol www.davidsuzuki.org/Climate_Change/Economics Centre for the Study of Economic and Social Research on the Global Environment www.uea.ac.uk/cserge Tyndall Centre for Climate Change Research www.tyndall.ac.uk Project duration: July 2003 – December 2004

Round 3