Adapting to climate change: assessing the economic benefits
There is no doubt that adapting to climate change will be one of the most important and complex policy challenges facing all levels of government over the next few decades.
Frontier (Australia) recently completed a report for the Victorian Department of Treasury and Finance on adaptation responses to climate change. The report developed a decision framework – the first of its kind in Australia – to help assess the economic benefits of various adaptation proposals. Amar Breckenridge and Chris Olszak conducted the study.
Discussions surrounding adaptation are not new, but tend to suffer from a variety of drawbacks. For a start, many neglect the scope for autonomous adaptation, and the need for governments to ensure that policy interventions facilitate adaptation mediated through markets. Climate change increases the costs of existing distortions (particularly those induced by government policies implemented for other reasons) and increases the returns from reforms.
The decision framework that Frontier has developed provides a road map for systematically working through these, and other issues, in order to contribute to socially beneficial adaptation policies.