The effect of proactive adaptation on green investment

Abstract

Climate change is one of the greatest challenges facing our planet in the foreseeable future anddespite the urgency of the situation global GHG emissions are still increasing. In this context,and since future climate changes appear now unavoidable to some extent, adaptation measureshave recently gained a new political momentum as an important component of climate policies.Contrary to mitigation options, adaptation measures do not reduce emission levels but reducetheir impacts. To assess the relationship and effects on the global economy of both mitigationand adaptation, we use in this paper an integrated assessment model (IAM) that includes bothproactive adaptation strategies and access to “green” investments (clean technologies) for mitigation.We find that the relationship between adaptation and mitigation is complex and largelydependent on their respective attributes, with weakly effective adaptation acting as a late complementto mitigation efforts. As its effectiveness increases, adaptation becomes more and morea substitute for mitigation. Sensitivity analysis on the potential magnitude of damages also indicatesthat scientific efforts to better describe GHG impacts will have immediate and importantconsequences on the sequence of mitigation and adaptation strategies.