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How Should We Spend Our Climate Dollar?

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By Mark Lubell - Posted on 08 March 2013

How should we spend our climate dollar: mitigation or adaptation?

Well, the climate change bad news continues to roll in. The Mauna Loa observatory in Hawaii has recorded another large rise in CO2 emissions, raising the total to 395ppm. A new peer reviewed analysis suggests that Annex I countries (the developed countries who are party to the UN Framework Convention on Climate Change)would have to reduce their emissions levels to 50% below 1990 levels by 2020, to have a medium chance to keep warming at only 2 degrees centigrade.

I don't need to ring the alarm bell here; others are taking care of that. But this data suggests a serious need to answer the question about how to allocate resources between mitigation and adaptation. Let's imagine that all of our limited resources for addressing climate change are boiled down into a single "climate dollar". How should we split this dollar?

One argument is we spend our entire dollar on mitigation, in order to solve as much of the problem as we can and limit damages. This assumes the dollar would actually lead to changes in the behavior of hundreds of countries and billions of people. One country alone will not solve the problem--this is a classic cooperation dilemma. And given this recent data and the history of global climate change treaties and politics, it is extremely unlikely that emissions will be reduced enough to limit warming to 2 degrees C. With such a small probability, I don't even think a gambling addict would be willing to place their entire climate dollar on the mitigation bet. Of course, I can't give you a specific estimate of the probability of policy success here, especially in the space of a blog post. But even if an intense research effort could give you an estimate of the probablity of success, just like with climate models, there would be a lot of uncertainty.

Another argument is we better start betting on adaptation, in order to minimize the social and economic costs (and take advantage of opportunities) of climate change. One nice thing about the adaptation bet is that the probability of benefits is higher to specific individual people, countries, or other actors. For example, individual homeowners who make defensible space around their homes in the wildland-urban interface will directly reduce their risk from wildfires. Or a country that invests in upgrading flood protection systems with "room for the river" types of strategies combined with strategic strengthening of levees may help adapt to changes in flood regimes.

It is conceivable that if the probability of mitigation is near zero, then we should spend our entire climate dollar on adaptation. Of course this is not politically appealing because human behavior in general and environmentalists in particular like to focus on solving the cause of the problem rather than giving up and dealing with the consequences. Furthermore, I'm not saying the probability of mitigation success is zero although I'm increasingly pessimistic about it. For now, I'm content to say that a more serious analysis of the trade-offs between mitigation and adaptation is needed, in order to identify how we should spend our climate dollar.