As part of the research carried out under the Gemina Work Package 6.2.10, this paper provides a summary and a critical survey of the methodologies and results of the literature on the economics of adaptation.
We divide the literature into two broad areas of research. First, we examine the studies that analyse adaptation from a bottom-up perspective. Second, we introduce the studies that examine adaptation using a top-down approach. The first group of studies investigates cost and benefits of sectoral adaptation strategies with a geographical detail that varies from country-level to global-level. The second group gathers two different streams of literature that share macro approaches, as opposed to the micro ones of the former group. It includes both theoretical works as well as the contributions based on Integrated Assessment Models (IAMs).
IAMs have originally been created to study policies aimed at limiting global warming. Recently they have also been extended to include adaptation as an alternative policy option to mitigation. This latter development has raised new issues that represent new challenges for the research community. In particular, how to make use of the vast amount of information provided by the bottom-up literature and how to integrate it into global models is paramount. Important research gaps to be filled include the improvement of the quantitative assessment of cost and benefit of adaptation needs, especially in some sectors and in developing countries and the clarification of the aggregation procedure used for scaling up bottom-up data. In addition, uncertainty and irreversibility are very marginally tackled by adaptation studies. Finally, the role of adaptation in international climate change negotiations, which is presently growing in importance, remains largely unexplored.

This report represents the Deliverable P57 developed within the framework of Work Package 6.2.10 of the GEMINA project, funded by the Italian Ministry of Education, University and Research and the Italian Ministry of Environment, Land and Sea.

• jel: Q54, Q58

• European Institute on Economics and the Environment

• Economic analysis of Climate Impacts and Policy Division

Authors

• Francesco Bosello
• Carlo Carraro
• Enrica De Cian