Considering the Costs of Climate Adaptation

Yesterday afternoon I attended a lecture by Michael Greenstone, the 3M Professor of Environmental Economics and former chief economist of the Council of Economic Advisers during the first year of the Obama Administration, addressing the question, “Will Adaptation Save Us from Climate Change?” This lecture was the keynote address at a PERC workshop on “Human Adaptation to Climate Change” I’ve been attending this week.

Greenstone set the stage by observing that there are three possible approaches to the threat of climate change: 1) mitigation — reducing emissions of greenhouse gases; 2) adaptation — responding to climate change by seeking to ameliorate its negative effects, and 3) geoengineering — attempting to modify the climate in some way to offset the effects of increased greenhouse gas concentrations. The first of these is unlikely to happen in the near term, as the United States and other nations have shown themselves to be quite resistant to adopting meaningful mitigation measures. The third, whether or not it is viable or desirable, is generally not considered an acceptable approach geo-politically. As a consequence, he suggested, in all likelihood we will have to engage in some degree of adaptation to climate change.

In Greenstone’s view, the question is not whether or not human civilization will survive. It almost certainly will. Nonetheless, climate change could have substantial negative conseuqences. Rather, the relevant questions are how adaptation will occur over various time frames, the cost of such adaptation, and how effective adaptive responses will be. There is some research that has investigated the costs and potential of near-term response to some degree of climate change, but not nearly enough on longer term responses to climate change and its consequent environmental effects. Insights can be drawn, however, from other research that documents individual responses to changes in environmental conditions. For example, Greenstone co-authored a paper showing that some individuals respond to local air pollution levels by, among other things, purchasing medications that relieve some of the respiratory effects of higher pollution levels. Such adaptation may reduce the negative effects of pollution, but it still comes at a cost.

Adaptation takes many forms. Some adaptation to climate change would involve changes in infrastructure and the like, but much adaptation is likely to occur at the individual level. To take a simple example Greenstone used in his talk (based on this paper): on hotter days, people use more air conditioning. This matters because high temperatures tend to correlate with increased mortality. Therefore, were it not for air conditioning (and other means of adaptation), an increase in temperature would cause a greater increase in mortality. With air conditioning, the mortality increase is less, though energy use is greater.  This illustrates how individuals can alter their behavior to compensate for some of the consequences of higher temperatures, albeit at some cost.

In poorer, less-developed nations, such as India, on the other hand, the results are somewhat different. As Greenstone explained, compared to the United States, India has less adaptive capacity, so the mortality effects of warming would be greater – far greater. There is a lot of adaptive capacity in wealthy, industrialized nations, but not so much in poorer, less-developed nations. Moreover, the United States’ adaptive capacity has improved dramatically over the course of the past century. That is, the relationship between high temperatures and increased mortality in the United States has weakened over time as the nation has become wealthier and more technologically advanced, making it easier for individuals to adapt to temperature changes.

One possible response to Greenstone’s analysis is that if wealthier nations can adapt to climatic changes more readily than poorer nations, as much attention should be paid to making poorer nations wealthier – and improving their adaptive capacity – as to figuring out how to reduce global greenhouse gas emissions so as to mitigate the threat of climate change. From an economic standpoint, the costs of mitigation could be compared to the costs of adaptation, and if the costs of mitigation are greater, this would provide an economic justification for focusing on adaptation instead of mitigation – and some would certainly endorse this view. Indeed, many in developing nations embrace this view. In any event, even if mitigation policies are eventually adopted, there will need to be some degree of adaptation, some of which will be undertaken at the individual level.

Originally posted at the Volokh Conspiracy.