ADAPTATION VS. MITIGATION

2015

Earth and Economics Supervisor:

Cees Withagen 03-07-2015

[ADAPTATION VS. MITIGATION]

mitigation could be better approached separately as they mismatch in time and governing scale,

describing uncertainty, and because they are interacting. However, a combination is necessary as a total emission reduction still leads to global warming and only adaptation will lead to an inhabitable planet. The RICE-2011 model calculates a global social cost of carbon of $42.68 per metric ton carbon, and a European one of $4.11. However the result should be interpreted as a guideline, as the outcome is heavily dependent on uncertain parameters. It should be wise for Europe to invest in approaches that not only deal with the undesirable impacts of climate change, but rather creates economic

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Table of content

1. Introduction and method p. 2

2. Theoretical framework p. 4

Results

3. Adaptation versus mitigation p. 7

3.1 Introduction p. 7

3.2 Explanation of terms p. 7

3.3 Overall pros and cons p. 8

3.3.1 Advantages adaptation p. 8 3.3.2 Disadvantages adaptation p. 9 3.3.3 Advantages mitigation p. 10 3.3.4 Disadvantages mitigation p. 11 3.3 Comparison difficulties p. 13 3.4 Separation or combination? p. 14 4. Mitigation, or no mitigation p. 16

4.1 No mitigation – Fossil fuel consumption p. 16

4.2 Only mitigation p. 18

4.2.1 Needed amount of adaptation p. 19

5. The RICE-2011 model p. 20

6. EU response to climate change p. 22

7. Discussion P. 23

8. Conclusion p. 23

References p. 25

Appendix A: Policy responses p. 30

Appendix B: Adaptation difficulties p. 31

Appendix C: Trade-off adaptation, mitigation, do nothing p. 32

Appendix D: Fossil fuel, year of depletion p. 33

Appendix E: Fossil fuel reserves, consumption, and year of depletion p. 33

Appendix F: Carbon-climate response p. 34

Appendix G: CO2 scenarios p. 35

Appendix H: Optimal adaptation with no mitigation p. 36

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1. Introduction and method

There are two main approaches to deal with the undesirable effects of climate change: adaptation and mitigation. Climate change mitigation focusses on the cause of global warming with main goal to reduce greenhouse gas (Hereafter GHG) emissions, through land-use and habitat management and the protection of carbon reserves. Adaptation deals with the consequences after carbon dioxide

(Hereafter CO2) is emitted into the atmosphere. It is vital in order to avoid unwanted impacts and to

maintain or restore ecosystem resilience. (Harrison et al., 2010)

The European Union (Hereafter EU) is currently investing billions of euros to gradually reduce the demand for fossil fuels by developing alternative sources and strategies. The Tradable emission system is an example of such strategy.

These alterations are not only expensive and not easily agreed on by the European Council, but also the question arises if these alterations yield, in terms of climate change, when the rest of the world is not abating theirs. As Dijkstra, VVD Member of Parliament of the Netherlands stated: “The world is getting warmer, but Europe is paying the price” (Eveleens & van Schaik, 2014).

Besides, the European Environmental Agency (Hereafter EEA) declares that before now consequences by global warming are already felt through whole of Europe. Higher average temperatures are measured and while the precipitation levels in northern Europe increase, are precipitation levels decreasing in the already dry southern part of Europe. The icecap of Greenland, the Arctic Ocean and many glaciers in Europe are melting, the snow cover decreases and permafrost is warming. (EEA, 2012)

In the past few years the occurrences of extreme weather for example heat waves, floods and drought, have increased significantly with associated damage costs. (EEA,2012).

The question arises; what is the best approach in order to address the undesirable impacts of climate change: adaptation, mitigation or a combination?

The main question is divided into three sub-questions, each answered in another chapter with the use of a literature research. The approach is multi-disciplinary, using physical geography, geology, chemistry, political science, sociological, and economic insights.

The first chapter focusses on comparison in mitigation and adaptation. These two concepts are chosen as the two main approaches to address the undesirable effects of climate change. The underlying assumption is that doing nothing, what can also be a choice, is not favourable as the task of the government is to maximize society welfare (Appendix A and C). The only GHG included in this research is CO2, because CO2 is the largest GHG contributor to global warming. Also, the mitigation forms carbon capture and control, and geo-engineering are excluded in this research for existing techniques are not yet cost-effective or preferred.

The chapter begins with an explanation of both terms. Secondly, the chapter identifies and summarizes the overall pros and cons on adaptation and mitigation through earth-economic theories. Finally, the comparison difficulties are set forth. The chapter ends with a literature review on the question if the two approaches would be preferably used together or separated.

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Through literature research the second chapter investigates if it is even possible to use only mitigation, only adaptation, or that a combination is always necessary.

To conclude if mitigation is necessary, or if only adaptation is an option, data from the Carbon Dioxide Information Analysis Centre (CDIAC) and British Petroleum (BP) are used. Own calculations are made with data on fossil fuel consumption from the British Petroleum 2014 report to determine when current discovered fossil fuel reserves are fully depleted. Although important, population growth, economic growth, and technological improvements are not included in these calculations due to great uncertainty. In the same sub-chapter, the geological consequences of burning all fossil fuels are set forth. Henceforth, the chapter continues with literature research to conduct an answer if only mitigation is an option. In this part more attention is paid to adaptation with the 2◦C scenario. This scenario was chosen because of the already inevitable temperature rise, even if strict mitigation efforts were made.

The last chapter, chapter 3, is dedicated to the RICE-2011 model coined by William Nordhaus. This model calculates the social cost of carbon, which represents the economic damages associated with an increase of one metric ton of carbon in the atmosphere. In a complete and perfect market, the result of the social cost of carbon should be equal to the carbon tax. A perfect carbon tax is a cost-effective governmental instrument to mitigate. And when the optimal amount of mitigation is known, the amount of adaptation necessary could be investigated afterwards.

The RICE model has been chosen as an integrated assessment model (Hereafter IAM), because it is one of the three main integrated assessment models used by the United States Environmental Protection Agency, and because it derives the world into regions, such as the EU. After the RICE-2011 results are set put with literature research, a conclusion is drawn on the best approach to deal with the undesirable impacts of climate change for the EU.

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2. Theoretical framework

Anthropogenic climate change

For the development of this theory the Intergovernmental Panel on Climate Change (IPCC) plays an important role. It is the leading international body for the assessment of climate change since 1988 and has ever since gathered scientific, technical and socio-economic data and information

concerning causes and effects of climate change (IPCC).

Since the previous century there is growing consensus that substantial climate change is caused by GHG emerged from human activity (Johns et al, 2003). In the fifth assessment (AR5) in 2014 of the IPCC, scientists are more than 95% certain that a major part of global warming is caused by anthropogenic activities. The theory is reinforced by analyses of the ecological consequences of human activity, based either upon simplified climate models, expert opinions, or predictions from general circulation models and statistical tests.

Furthermore, projected increasing temperatures differ quite strongly due to a number of matters. For example: uncertainty about the balance of greenhouse warming, sulphate aerosol cooling, and the effect on the ocean. Despite evidence provided by climatologists and other scientists, there still is lack of long term knowledge of the most recent human actions, and therefore certainty about the consequences of anthropogenic pollution up until now remains fragile (Myles et al, 2000). Thus, intensification of quantification of long term effects is needed.

Overall, a positive causal relation is scientifically observed between the actions of human and climate change. Important insight for this research is that even though there still is uncertainty about the precise drivers, pressures, states, impacts and responses to climate change, IPCC has agreed upon the fact that adaptation and mitigation measures are essential for protection of future societies (Chmielewski, 2002).

Game theory

Game theory is the science of strategy, and was pioneered by Princeton mathematician John van Neumann. The discussion of game theory started in 1928, when first mentioned in “Theory of Parlor Games” (Dixit and Nalebuff, 2008).

This theory attempts to determine mathematically and logically the actions that “players” should take to secure the best outcomes for themselves in a wide array of “games” (Dixit and Nalebuff, 2008). It is the study of multi-person decision problems, frequently arising in economics. For example, each firm must consider what the other will do (Gibbons, 1992).

Criticism on the game theory was that it is truly a model, and like all models must be looked upon as such (Morgenstern, 1964). Sometimes decisions are bounded to laws for instance, and that the mathematical outcomes are based upon a ‘normal’ world, not a world in chaos (Morgenstern, 1964). Also, the theory assumes that everyone makes decisions rational.

This is important in this research because when choosing mitigation or adaptation, men need to consider the action of other “players”. For example, if Europe chooses to mitigate, however all other

5 regions do not, Europe could better invest in adaptation.

An important insight is the Prisoners dilemma. The prisoners dilemma assumes that players always choose dominant strategies. Therefore, the best strategy is to assume that the one supervising the game wants to reveal players information. This means that in a game it is always better to

cooperate, even if it means losing the game. Even the worst outcome of the game is still an

acceptable outcome. Losing one game is not a big lost, as long as your reputation is still intact in the following series of games. (Scheve, 2015)

IPAT equation

The founders of the IPAT equation are Paul Erhlich and John Holdren in 1971. The published article had greatly advanced the understanding and communication of environmental problems and their potential solutions (Ehrlich and Holdren, 1971). The equation holds that environmental impact (I) equals, or is a function of, Population (P), Affluence (A) and Technology (T). Apparent from the equation is that population growth and consumption growth worsens environmental problem, and that technological improvements increasing productive or energy efficiency on the other hand reduces this pressure (Alexander, 2014). In other words: decision makers can focus on advancement in technology, as this will score out the effects of a growing more consuming population. (Alexander, 2014) The IPAT equations ended up marginalising population and consumption as sites of

environmental action, and privileging technological fixes (Huesemann and Huesemann, 2011). However as according to the Jevons’ paradox, this efficiency strategy towards a sustainable economy is doubtful, and can even rebound causing an increase in production and consumption (Alcott, 2004).

Jevons’ paradox

In 1865, this theory was coined by William Stanley Jevons in ‘ The Coal Question’. It stated that efficiency gains from technological advancements, specifically the more cost efficient use of coal resulting by the industrial revolution, did not save these resources as was claimed. Instead, it increased the overall consumption. (Alcott, 2004)

This theory is important for this research, because when Jevons’ paradox is applied, efficiency policies are counter-productive and can backfire. Also business-as-usual efficiency gains should be compensated with demand-side policy controls like quotas, for example a carbon emission trading scheme as introduced in the EU (Alcott, 2004). Thus, the first important insight is that the Jevon’s paradox does not apply to policies that promote conservation by increasing the price of energy, such as a carbon tax or cap and trade (Siegel, 2011). Second, the IPAT equation does not include that efficiency without sufficiency is lost, thus fully relying on technological advancement is not a reliable strategy.

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Green paradox

The Green paradox theory is coined by the German economist Hans-Werner Sinn in 2008. He was convinced that instead of mulling over for the thousandth time about which technical measures can be applied to reduce CO2 emissions, we should turn to the core question of how to induce the resource owners to leave more carbon underground, as that is the sole possible way to solve the climate problem. (Sinn, 2009)

Because according to Sinn, fighting climate change through fossil fuel demand-reducing policies that are intended to flatten the time profile are paradoxical. The impact of such policies only steepens the extraction path of fossil fuels rather than flatten it. (van der Ploeg and Withagen, 2010). Although the measurements to reduce consumption exert an increasingly stronger

downward pressure upon the world’s fossil fuel market price and dampen the rate of increase in such prices, the supply side is not taken into account. However, several researches have been conducted on the likeliness of the occurrence of the Paradox. Grafton, Kompas & van Long (2010) concluded that the Green Paradox can be caused from a policy of biofuel subsidies, but is not a general result. This depends on demand and supply elasticities, technological change in fossil fuel extraction and how extraction costs respond to changes in remaining reserves. Also a research in 2011 and 2013 concluded that this theory is limited to specific conditions (Edenhofer & Kalkuhl. 2011; Hoel, 2013). For instance, if policy is aimed at the supply-side, no Green Paradox will occur (Hoel, 2013).

An important insight for this research is that mitigation of climate change does not necessarily lead to a lower global amount of emissions, but rather to a replacement of polluter. Also a demand-side approach, as suggested as solutions to the Jevons’ paradox, could result in a Green paradox.

DICE and RICE model

One of the earliest dynamic economic models of climate change was the Dynamic Integrated model of Climate and the Economy, or DICE model. This model was developed from a line of previous energy models and one of the first models that was integrated to an end-to-end mode (Nordhaus and Boyer, 1999). This means that the parameters economics, the carbon cycle, climate science, and the impact are modelled by eliminating as many middle layers or steps as possible to optimize performance and efficiency. Thus, the model, as all models do, simplified the reality for conducting results on how to slow greenhouse warming (Nordhaus and Boyer, 2000). The RICE model is a regional version of the DICE model, were the world is separated into 12 regions.

The basic structure of the DICE and RICE models has survived mostly all scientific criticism (Nordhaus and Boyer, 2000). However, these models rely on very debatable and uncertain parameters, and should therefore be contemplated before using without further consideration (Pindyck, 2013).

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3. Adaptation versus mitigation

3.1 Introduction

Climate change is one of the hardest and most complex problems policy has ever needed to deal with, harder than any other issue with high importance. Its form and size is far from certain, as well as the impacts and remedies. And however climate change is already happening, it is rather felt in the future than confrontational in the present. As will be further investigated in this chapter, effective mitigation lies beyond the national borders, and will require international cooperation. (Garnaut, 2008) For a long time mitigation was the main policy approach, and it was politically incorrect to speak about adaptation, as this was felt as accepting defeat in the battle against the emissions resulting in climate change (Burton, 1994). This has changed since scientists repeatedly pointed out that climate change cannot be altogether avoided even if trying very hard, and because not everybody is going to try equally as hard to reduce GHG emissions (Tol, 2005).

In this chapter both terms, adaptation and mitigation, are set forth with the geological, economic and political (dis)advantages. The last sub-chapters explain if adaptation and mitigation are best used together or separately, with all the difficulties in comparison.

3.2 Explanation of terms

The undesirable negative effects of climate change can be tackled by two main approaches; adaptation and mitigation (Appendix A).

Adaptation involves efforts to limit human’s vulnerability to climate change impacts through various measures, while not necessarily dealing with the underlying cause of those impacts (Mann, Alley & Pugh, 2014). The main goal of adaptation is to increase the adaptive capacity, which is the ability of a system to adjust to climate change. This includes the variability and extremes of the climate, to decrease potential damages, and to deal with the consequences. As not all consequences are negative, adaptation can also take advantage of opportunities that come from climate change. (IPCC, 2001) Some examples of adaptation costs are for instance the estimated costs for developing drought resistant crops or climate change resilient building. The costs for developing genetic

modified traits range between $1 million up to $136 million (McDougall, 2011; Goodman, 2002). The costs of constructing more resilient buildings against climate change in the Organisation for

Economic Co-operation and Development (hereafter OECD) countries, such as storms and floods, could range from $15 to $150 billion each year (higher costs are expected with further increase in temperature) (Stern, 2006). A case study of adaptation in the Netherlands has shown that

adaptation could mitigate most of the damage caused by river flooding at moderate costs. The estimated economic costs resulting from flood damage decreased from 39.9 billion to 1.1 billion with relatively small adaptation costs around 1.5 billion (EEA, 2007).

Adaptation is a private good which mainly benefits the societal welfare of the nation (Kane & Shogren, 2000), and can be autonomous or policy driven (IPCC, 2001). Autonomous adaptation occurs gradually and is not necessarily a response to climate change alone. It is constrained by economic, social, technological, institutional, and political conditions (IPCC, 2001). Policy driven

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adaptation, also referred to as facilitative adaptation with a main focus on the adaptive capacity, is done at the national level, and in developing countries often with support of multilateral

organisations (Tol, 2005).

Mitigation involves reducing the magnitude of climate change itself.

The act of mitigation can be subdivided into two alternative strategies: emissions reductions (dealing with the problem at the source) and geoengineering (offsetting the effects of GHG emissions) (Mann, Alley and Pugh, 2014). Examples of mitigation include the reduction of carbon emission through more efficient conversion of fossil fuels, or switching to low-carbon energy sources (e.g. nuclear and renewable) (IPCC, 1996), and although not cost-effective yet with existing techniques, carbon capture and storage is also a form of mitigation (Florin and Fennell, 2010). Key policy instruments shaping incentives include taxes, trading based on the distribution of property rights (such as the tradable emissions system in the EU), and regulation. Also preferences and behaviour could be altered through handing out information, discussion and education. (Stern, 2006)

Mitigation concerns an investment in self-protection to reduce the odds that a bad state of nature is realized (Kane & Shogren, 2000). It is a public good, non-rival and non-excludable so its benefits are global (Kane & Shogren, 2000).

Mitigation efforts have to be based on the principle of common but differentiated responsibility. Ethically, the developed countries should take the lead as the increase in CO2 concentration in the atmosphere since 1800 is mainly a result of their industrialization. Furthermore, these countries have technological advantages and the resources to act. (Adger et al., 2006)

3.3 Overall pros and cons

This sub-chapter sets apart the overall pros and cons on adaptation and mitigation with the use of literature research.

3.3.1 Advantages of adaptation

Adaptation has the potential to reduce the undesirable impacts of climate change.

The benefits of adaptation are, opposite to mitigation, likely to be felt in the near term and by locals because adaptation is implemented local rather than international (IPCC, 2001). As autonomous adaptation occurs spontaneously as a reaction to change in natural or human system, not always incentives are needed to be created by the government. A governmental organisation, such as the EU, can be helpful when climate change impacts transcend borders of nations (e.g. river basins) and when impacts vary considerably across regions. The role of a government can be especially useful to enhance solidarity among affected regions and to ensure that disadvantaged regions and those most negatively influenced by climate change are capable of taking the necessary measures to adapt (European Commission, 2015)

But because adaptation appears to be more local, and therefore less stakeholders are involved, difficult decisions can be made in a shorter time frame and with less political interference.

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climate variability and is probably also more robust to other socio-economic change (Tol, 2005). Such robust adaptation should always yield benefits as a ‘no regret’ strategy, regardless if and how climate change would occur. For instance: protecting water sources. The outcome of precipitation models differ widely from one another, so an investment in water safety should also range. In this case, a robust adaptation strategy could be installing water tanks to assure water security and to avoid water contamination and salinization.

So adaptation can make the society more robust and flexible, which is also preferable against other changes, many of which are more rapid than global warming. One does not want to use drought resistant crops because of climate change, but rather because there already exists a drought problem in many places in the world. Climate change is only another reason to invest in further developing. (Tol, 2005)

3.3.2 Disadvantages of adaptation

The implementation of adaptation options also presents constraints that are financial, technical and political (IPCC, 2001). There are limits to the ability to adapt to fundamental and rapid climate change, in the sense that the human and economic costs could become very large, for example building dikes along the entire coast to deal with the consequences of sea level rise.

Also due to limits, there are impacts that will be unavoidable (Appendix B). For example, the constraints on building or extending flood defences would include pressure for land, conservation needs, and amenity value of coastal areas (IPCC, 2001). To build foreword on the previous example, a flood defence could also have negative effects on the tourism industry because they change landscape, ecosystem health and beach leisure attractions. These costs are difficult to estimate as guidelines for monetization are not always available (Hallegatte, 2009).

Adaptation is particularly difficult when the precise nature and incidence of effects are uncertain (Stern, 2006). Ideally, climate models would be able to produce climate statistics for the future, from today to when a building or when infrastructure will need to be replaced, so future investments can be optimized (Hallegatte, 2009). However, problems arise with this. First, there is a scale of misfit between what can be provided by climate models and what is needed by decision-makers. Decision-makers want clear and reliable results that they can use to determine the best investments.

Nevertheless a model is a simplified replica of reality, and should therefore be seen as a guideline, a range of opportunities, rather than a clear solution. More reliable results could be generated by downscaling techniques (e.g. using regional models with limited domains or statistical relationships calibrated on the present climate), but the problem of climate change uncertainty still arises. (Hallegatte, 2009) Improved knowledge could mean narrower projection ranges, however uncertainty will still exist in future emission paths. And ill-designed implemented adaptation strategies could make the situation even worse than without any adaptation. (Hallegatte, 2009) This maladaptation, such as promoting development in risky locations, can occur due to decisions based on short-term consideration, neglect of known climatic variability, imperfect foresight, insufficient information, and over-reliance on insurance mechanisms (IPCC, 2010).

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Only investing in adaptation and not in mitigation will raise problems that are humane, economic and social (Adger et al., 2006). Adaptation options generally occur in socioeconomic sectors and systems in which revenue of capital investment and operating costs is shorter so that costs are quickly recouped, and less often where long-term investment is required (IPCC, 2001). An example is the purchase of more efficient irrigation equipment by individual farmers in prospect of increased evapotranspiration in a warmer climate.

In terms of international solidarity, the rich countries, who contributed by far the most in climate change, will have to channel development assistance to less developed countries to meet the new demands arising out of climatic disasters (Adger et al., 2006). However, applying principles of fairness and equity is not a given, because nations will probably want to maximize their own welfare based on selfishness.

3.3.3 Advantages of mitigation

Reducing carbon emissions does not necessarily mean that it makes poorer, especially in comparison to adaptation measures. Taking action to tackle climate change can create economic opportunities and higher living standards by energy-efficient and resource-efficient production and consumption (King, 2004).

And even when mitigation investments are primarily (short-term) negative, they are still less expensive than most adaptation measures. An extensive review by the IPCC suggest that stabilizing atmospheric carbon dioxide at 550 ppm would lead to an average gross domestic product (hereafter

GDP) loss for developed countries by 2050 of only around 1%. This figure should be more than offset

by the reduction from the risks, for example, flooding associated by climate change. If just one flood broke through the Thames Barrier today, it would cost about £30 billion in damage to London, roughly 2% of the current U.K. GDP. (King, 2004) So in comparison with adaptation, mitigation can be more cost efficient as in many cases the costs of mitigation are lower than to deal with the undesirable impacts afterwards CO2 is emitted.

Also some co-benefits arise from mitigation. Near-term health benefits for example, from reduced air pollution that may offset a substantial fraction of mitigation costs (IPCC, 2007b).

Mitigation can also be positive for energy security, balance of trade improvement, provision of modern energy services to rural areas, sustainable agriculture and employment (IPCC, 2007b). Current GHG emissions are largely the result of past emissions from rich countries, such as the countries in the EU. They are the source of the problem, yet the impacts on developing countries will be of great severity (Stern, 2006). In human terms, developing countries are likely to be worst affected. They will be hit not only by increased variability but also by more adverse overall

environment as temperatures rise. They will have to deal with this despite low incomes, often small margins for adjustment and little resources. (Stern, 2006)

As mentioned before, mitigation is a public good, so developing countries also profit from the action taken by more developed countries. As fewer resources are in place to adapt and climate change hits the hardest in developing countries, the question rises if only adaptation in developed countries is ethical. So from a global perspective, the benefits of mitigation are higher in comparison with adaptation (which is a private good).

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3.3.4 Disadvantages of mitigation

According to Stern (2006),” any effective response to the challenge of climate change through mitigation must be based on an international understanding that its origins, impact, scale and urgency require action that is global and collective” (Stern, 2006, page 9).

However, for some countries no mitigation could be seen as an alluring perspective as the national costs of mitigation lie so much higher than the adaptation costs. Although an extreme position, it illustrates the dilemma between national stake and the international one (Adger et al., 2006). The problem of choosing the right amount of mitigation requires the resolution of a genuine prisoners dilemma: each country benefits from a national point of view if it does less of the mitigation itself, and other countries do more. However, if all countries act on this basis without the right

communication and joint action, there will be no resolution to the prisoners dilemma (Garnaut, 2008). Solving this dilemma requires communication and a rightful cost and benefit sharing where all parties are satisfied. But achieving satisfaction among all parties will possibly take more time than the time remaining before severe climate change impacts occur. (Garnaut, 2008)

Another problem resulting from not all countries abating is carbon leakage. This leakage may occur due to reduced pressure on the price of energy by abating countries, which results in lower energy prices globally. Non-abating countries probably make use of the lower energy prices and will substitute the consumption of the abating countries. Carbon leakage can also encourage heavily energy dependent companies to shift to non-abating countries, and to export their products to carbon constrained countries. (Babiker, 2005) The amount of these spill-overs depend strongly on policy decisions on the amount of carbon constraint, import regulations, and oil market conditions (IPCC, 2007b), but can actually lead to an increase in global carbon emissions (Babiker, 2005). Well intended mitigation measures by can also turn out badly. Fighting climate change through fossil fuel demand-reducing policies that are intended to flatten the time profile are paradoxical (Sinn, 2009). They prompt resource owners to try to escape this by accelerating extraction of their fossil fuels, which in turn speeds up the warming of the planet (Sinn, 2012). The impact of such policies only steepens the extraction path of fossil fuels rather than flatten it (van der Ploeg and Withagen, 2010). A challenging supply side approach is therefore necessary to avoid this paradoxical outcome, which does not always lie in the power of abating nations (Hoel, 2013).

With the many uncertainties existing in the impacts and approaches of climate change, the costs and benefits of mitigation are also very uncertain and can potentially differ tremendously. Therefore, often the easiest decision is to postpone decision making until more information is available or more (energy-efficient) techniques are developed. This is supported by the IPAT equation (Box 1).

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However, waiting for technology progress as a sustainable solution can backfire or rebound, causing higher production and consumption (Alcott, 2004). When efficiency increases, prices will decrease and therefore the technology will be cheaper and more easily available for the ones who were not capable before. As stated before, this can be overcome by governmental instruments as a carbon tax or cap and trade (Siegel, 2011). However with the use of these kinds of instruments, it is likely to provoke a Green Paradox (Box 2).

As stated as one of the pros on mitigation, the following can also turn in a con; developing countries that are better off with mitigation because of the nature of mitigation as public good also seem to get worse of it. Mitigation, which presumably strives to reduce climate change impacts, in fact increases them (Tol and Dowlatabadi, 2001). A reduction in economic growth in the OECD, caused by emission abatement, could have negative effects on the economic growth at the bottom of the value chain. Because when it protects its own employees, it is often done at the expense of its suppliers. At the bottom of the value chain there are exporters of primary products, including most African countries. A lower economic growth would imply that there is less money to spend on health care, something currently more pressing on the welfare of these countries than climate change. (Tol, 2005; Tol and Dowlatabadi, 2001)

The last reason why mitigation is not always a preferable approach is because it may also add to risks. Example given by van Vuuren et al. (2011) is bio-energy. However bio-energy can reduce CO2 emissions by substituting fossil fuel based energy, when implemented wrong it can further biodiversity loss and reduce the food security (van Vuuren et al., 2011).

BOX 2: The Green Paradox

According to Sinn (2009), fighting climate change through fossil fuel demand-reducing policies that are intended to flatten the time profile are paradoxical. The impact of such policies only steepens the extraction path of fossil fuels rather than flatten it (van der Ploeg and Withagen, 2010), because resource owners are likely to bring forward their extraction plans securing their resources as financial capital when valuation diminishes over time.

BOX 1: The IPAT equation.

The equation states that environmental impact (I) equals, or is a function of, population (P), affluence (A), and technology (T). Apparent from the equation is that population growth and consumption growth worsens environmental problem, and that technological

improvements on the other hand reduces this pressure (Alexander, 2014). In other words: decision makers can focus on advancement in technology, as this will score out the effects of a growing more consuming population.

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A combined assessment of adaptation and mitigation can be useful for a number of reasons: (1) the expected climate impacts and the costs of adaptation are key values of the mitigation strategy chosen, (2) it considers the limitations that come with adaption to climate change, (3) there is some interaction between adaptation and mitigation strategies, (4) and what should be taken into account are the feedbacks that could come from the impacts of climate change (van Vuuren et al., 2010). However, methodological differences obstruct such joint assessment of mitigation and adaptation strategies, especially the strategies that describe autonomous adaptation processes because it is mostly an individual process that cannot be measured with ease (Patt et al., 2010). Besides, even when the costs and benefits of mitigation, adaptation and leftover damages can be traded-off against each other (Appendix C) is suggested, conceptual and analytical problems make it difficult for such an approach (van Vuuren, 2010).

First of all, the disciplines involved in mitigation and adaptation research describe uncertainty different from one another. As mitigation research mostly uses quantitative methods and concentrates on mean estimates, adaptation research mostly uses qualitative descriptions of uncertainty and concentrates on the risk of dangerous events even those which have a low chance of occurrence (van Vuuren et al, 2011). These different perceptions of uncertainty may make a collective assessment of different strategies difficult (Swart et al., 2009).

Second, there is a mismatch of spatial scale. While mitigation action is most of the times taken at a national or local scale, the benefits are global. As a result and already mentioned as disadvantage of mitigation, a key factor in the success and cost of climate policy extends to international

negotiations and cooperation (Tol, 2005; Barker et al., 2009; van Vuuren et al., 2009). In comparison, adaptation is primarily a concern of local managers of natural resources, households and companies, within a regional economy and society (Tol, 2005). The costs and benefits occur on several scales from local to international (van Vuuren et al., 2010). For these kinds of reasons, assessment of mitigation tends to concentrate on the global level, while adaptation research is mostly focused at the local scale.

Also, there is a mismatch of timescale. Strict mitigation scenarios require strong, early reduction of emissions. However, the climatic impacts will in the first decades hardly vary from those in scenarios without climate change policy due to large inertia within the climate system (van Vuuren et al., 2010). In contrast some co-benefits are to be seen in shorter term, for example reduced air pollution. This while adaptation measures are likely to yield private and social benefits over the near-term (e.g. air conditioning). Some exceptions exist in long-term planning like flood protection (van Vuuren et al., 2010).

This gives trouble comparing the two in costs and benefits. While a cost-benefit analyses (Hereafter

CBA) on mitigation focuses on short term action for possible harmful long-term developments, a CBA

on adaptation looks at short term actions for short- to medium term developments. This implies that these CBA’s should be made at different timescales, and therefore are very different from each other and not comparable (Tol, 2005).

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Last, there exist difficulties because the two approaches are interacting.

Many adaptation strategies that are appealing today imply increased energy consumption for example air-conditioning. When climate change and the resulting impacts seem to be worse than expected in the next 50 years, stricter mitigation strategies are likely to be introduced. This results in a rise of energy costs and carbon price. For that reason, highly energy-consuming adaptation

alternatives seem to be not fit enough for unexpected climate change (Hallegatte, 2009).

This also works the other way around. The benefits from mitigation can be influenced by the amount of adaptation (Tol, 2005). For example, when a dike is constructed which will prevent an area from flooding; the mitigation measures are less beneficial because the consequence of little less peak of water is not that influential anymore.

3.5 Separation or a combination?

A particularly complex relationship exists between adaptation and mitigation policies. First,

mitigation efforts will influence amplitude and pace of climate change, adjusting adaptation needs. Second, adaptation capacity, limits and costs make it more or less acceptable to exceed certain GHG concentration thresholds and are, therefore, important inputs in the choice of long-term climate policy targets. (Hallegatte, 2009) And as set put in the previous sub-chapter, adaptation and mitigation are a mismatch. Therefore, it can be argued that the two should be approached separately (Tompkins and Adger, 2003).

Tol (2005) also argues that adaptation and mitigation should be kept largely separate. It also looks at a few exceptions where adaptation and mitigation should be integrated, and warns that the results are even more politically incorrect than seeing adaptation as accepting defeat in mitigation. He argues that we should embrace adaptation in triumph, at least for some impacts. (Tol, 2005)

According to Adger et al. (2006), in a world with so many other problems, it will take time for emission reductions to have a real impact, although this needs to happen ultimately. Therefore, adaptation will be a major component of the climate change regime.

According to Stern (2006), there are limits to the ability to adapt to fundamental and rapid climate change, in the sense that the human and economic costs could become very large. Adaptation is particularly difficult when the precise nature and incidence of effects are uncertain. He states that adaptation and mitigation are not alternatives and that we should pursue both. However, the costs of each will influence the choice of policies for both. (Stern, 2006)

Garnaut (2008) stated that the international community is too late with effective mitigation to avoid significant damage from climate change. So in the best of circumstances, people everywhere will be adapting to substantial climate change impacts through the 21st century.

Van Vuuren et al. (2010), are convinced that because the complexity of the issue and its

uncertainties there is no optimal mitigation, adaptation or combined strategy that can be pursued in reality. They believe it to be more useful and reflective of the issue to describe the relationships between different response strategies than to seek to determine an optimum.

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Although adaptation and mitigation are not easily combined, and should therefore be approached separately, the fact cannot be ignored that we need both. Even with the most stringent mitigation paths, unavoidable economic-cost should be minimized with adaptation measures. A governmental institution should focus more on mitigation, because of its transboundary character. Besides such institutions can internalize externalities with the use of governmental instruments, such as taxes. Adaptation will need less governmental interference as autonomous adaptation occurs

spontaneously and locally. Hereby, the government is only necessary to invest in public goods, for example flood defence and enhancing or guaranteeing water security. Reaching an optimum will be difficult to achieve and should not be pursued, because of climate uncertainties, both in short and long term, and due to monetizing problems.

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4. Mitigation or no mitigation

This chapter will use literature research to determine if it is even possible to use the one or the other, or if a combination is always necessary. First the fossil fuel consumption will be investigated with an inference on how long it will take for reserves to be fully depleted. After, the physic geological effects of burning all fossil fuels are set forth. Second, the consequences of only

mitigation are explained and the amount of adaptation needed when continuing on this mitigation path is studied.

4.1 No mitigation – fossil fuel consumption

The concentration of atmospheric CO2 has unambiguously increased since 1751. One of the prime contributors to this increase has been the combustion of fossil fuels. (Andres et al., 1998) Fossil fuels are hydrocarbons, and have three major forms: coal, oil and natural gas.

Since 1751 approximately 365 billion metric tonnes of carbon have been released worldwide to the atmosphere from the consumption of fossil fuels and cement production. Half of these fossil-fuel related CO2 emissions have occurred since the mid-1980s. (CDIAC, 2015)

The 2010 global fossil-fuel carbon emission estimate, 9167 million metric tons of carbon, represents an all-time high and a 4.9% increase over 2009 emissions. The increase marks a quick recovery from the 2008-2009 global financial crisis which had obvious economic and energy use consequences, particularly in North America and Europe. (CDIAC, 2015)

Despite a further decrease of energy intensity, world energy consumption is expected to more than double in the 2000-2050 period and increases by another 25% in the 2050-2100 period. Even with the mitigation goals to increase green energy, over the whole century, energy supply is expected to remain dominated by fossil fuels. While oil and natural gas production peak and decline during the century, the use of coal is expected to increase during the whole period. (van Vuuren et al., 2010)

The question arises if we can continue on this path, or that mitigation is always necessary.

First because of fossil fuels being a finite source, the question is whether when instead of if we need to make a transition to another energy source. And second because of the undesirable impact of carbon based CO2 emission by fossil fuel burning.

At this moment we consume over 11 billion tonnes of oil in fossil fuels across the globe each year. According to the Central Intelligence Agency (Hereafter CIA) (2015) crude oil reserves are vanishing at the rate of 4 billion tonnes a year, and if this continues without implementing increase in

population or aspirations, the known oil deposits will be gone by 2052. Even though coal and gas can substitute oil, using gas to fill the gap will only give an estimated 8 more years, till 2060. Adding the coal reserves, those are often claimed as enough coal to last hundreds of years, will only give enough energy to 2088 when also substituted for the other finished fossil fuels (Appendix D). (Ecotricity, 2015) By 2088 all reserves known to man this day are most certainly used, however new reserves will probably be found between now and 2088. This does not mean it will gives use infinite time, just more time to find an alternative solution to fossil fuels. (Ecotricity, 2015)

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Calculated with the use of the 2013 reserves and consumption data on crude oil, natural gas and coal from British Petroleum (BP), these are the years the resources are finished: crude oil approximately 2064, natural gas 2068 and for coal by the year 2246 (not keeping in mind the substitution from oil/gas to coal)(Appendix E). These calculations are made without population or aspirations growth taken into account; however they support the data from the CIA. So to answer the first question if mitigation is necessary because of an energy transition, the answer is yes. In the near future alternative sources should be found to substitute fossil fuels.

The second question is if it is desirable to burn all fossil fuels, or that mitigation is earlier necessary before all fossil fuels are burnt.

The global temperature responses when atmospheric CO2 levels rise. According to Matthews et al. (2009) “climate carbon modelling experiments have shown that: (1) the warming per unit CO2

emitted does not depend on the background CO2 concentration; (2) the total allowable emissions for climate stabilization do not depend on timing of those emissions; and (3) the temperature response to a pulse of CO2 is approximately constant on timescales of decades to centuries “ (Matthews et al., 2009, page 1). The estimation of the temperature increase or carbon-climate response (hereafter CCR) ranges between 1.0-2.1 ◦C per trillion tonnes of carbon. This temperature could even be higher as great uncertainty exists in land-use change and aerosol forcing (Matthews et al., 2009). Land-use change can have positive and negative effect on the amount of atmospheric CO2 as an increase in vegetation can lead to an decrease in CO2 and vice versa. The effect of aerosol forcing on global warming is still questionable as an increase in aerosols blocks out more of the sun’s energy but could also absorb it resulting in a warmer planet.

So burning all fossil fuels is of real practical concern for humanity. Estimates of the carbon content of all fossil fuel reservoirs including unconventional fossil fuels such as tar sands, tar shale, and various gas reservoirs that can be tapped with developing technology (GEA, 2012) imply that CO2

conceivably could reach a level as high as 16 times the 1950 atmospheric amount. This suggests a global mean warming approaching 25 ◦C (Appendix F), with larger warming at high latitudes (Hansen et al., 2013). With these temperatures humanity can only work and survive outdoors during

summertime in mountainous regions (Kenney et al., 2004; Hanna and Brown, 1983).

Also such temperatures would eliminate grain production in almost all agricultural regions in the world (Hatfield et al., 2011), and increased stratospheric water vapour would diminish the stratospheric ozone layer (Anderson et al., 2012).

So from a geological point of view, large climate change from burning all fossil fuels would threaten the biological health and survival of humanity, making policies that rely substantially on adaptation inadequate. Therefore, mitigation is always necessary.

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4.2 Only mitigation

If we stop emitting carbon dioxide today (total mitigation), global warming would not immediately stop. The existing of a delay in temperature increase makes sure that the climate catches up with all the carbon already emitted. Solomon et al. (2008) tested what would happen if CO2 emissions immediately ceased after concentrations peaked at various values, starting at 450 ppm. They concluded that CO2 levels diminish so slowly that they remained substantially above pre-industrials levels 1,000 years into the future. Global temperatures also stayed up, and declined only from their peak by the year 3000. This means that once carbon dioxide is emitted into the air, it affects the climate for thousands of years (Clark, 2012).

The slow recovery has several reasons. First of all, there are geological processes that remove carbon dioxide from the atmosphere, performing as a natural sink (Solomon et al., 2008). Between 65 – 80 % of CO2 released into the air dissolves into the ocean over a period of 20 up to 200 years. The rest is removed by slower processes that take up to several hundreds of thousands of years, including chemical weathering and rock formation. (Clark et al., 2012) So roughly 20% of the emitted gas will stay in the air for at least a millennium which leads to a warmer planet even after emissions are cut off (Solomon et al., 2008). The second reason why there is a slow recovery of atmospheric CO2 is because of the inertia of the oceans. As the large mass of ocean on the globe is delaying the rate of climate warming today because most of it is lagging behind the increase in surface

temperatures. Once emissions have stopped, this will delay the earth’s cooling (Solomon et al., 2008).

In 2009, the Copenhagen Accord was signed by the world leaders, agreeing to limit the increase in global average surface temperature to less than 2 degrees Celsius above the pre-industrial level (Sanford et al., 2014). This illustrates the most ambitious mitigation pathway to let CO2 levels not exceed the 240 ppm mark (Anderson and Bows, 2010; Monastersky, 2009).

However Hansen et al. (2008) offered a number of reasons for arguing that even the level 450 ppm is too high to avoid major impact of climate change, such as crossing the threshold of losing Antarctica’s ice. These CO2 levels range between 350 to 500 ppm, were it is best to keep at the bottom of the range. (Monastersky, 2009). This implies a temperature rise of maximum of 1.5 degrees Celsius, which is consistent with the IPCC RCP 2.6 scenario (Peters et al., 2012). However, as illustrated in Appendix G, this output of the RCP2.6 scenario is already unfeasible as the world is not abating CO2 emissions that ambitiously (Mora et al., 2013).

So, as also mentioned before, substantial climate change is already inevitable, since mitigation will have only minor effect on stocks of GHG in the coming decennia’s (Stern, 2006). In the context that humankind already is challenged today to provide, and for future generations to achieve a more sustainable and equitable standard of living (IPCC, 2010), adaptation has become essential, especially in the countries most affected.

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4.2.1 Needed amount of adaptation with no mitigation

Although the impacts of temperature rise are uncertain, and therefore adaptation costs are also uncertain to calculate, more is known every day about the geological consequences.

For example, according to Solomon et al. (2008), sea level is expected to rise upon a range of 0.2-0.6 meter per ◦C increase. And although given particular years would show some exceptions, the long-term irreversible warming and main rainfall changes are suggested to have important consequences for many regions (Solomon et al., 2008). Decreases in dry-season precipitation in northern Africa, southern Europe, and western Australia are expected to be near 20% for 2 °C warming (Solomon et al., 2008).

As some damage costs cannot be prevented by adaptation because sometimes this cannot be done at reasonable costs, or is simply not possible, climate costs exist of costs of mitigation, cost of adaptation and costs of damages (EEA, 2007).

Ciscar et al. (2010) estimates that if the climate change of the 2080s were to occur today, the annual loss in household welfare in the EU resulting from the four market impacts agriculture, river floods, coastal areas, and tourism, would range between 0.2-1%. If the welfare loss is assumed to be constant over time, climate change may halve the EU’s annual welfare growth (Ciscar et al., 2010). However, most costs can be avoided by adaptation. These costs to minimize damage due to climate change are estimated on $4 to $100 billion a year over the next 20 years (EEA, 2007).

Also estimations of costs and benefits are made with the AD-DICE and AD-WITCH models with the optimal amount of adaptation in a no mitigation scenario. Although, investing in adaptation is not necessarily immediately beneficial, it is a vital approach in order to minimize damage costs (Agrawala et al., 2010).

The costs are estimated at respectively 0.28 and 0.19% of world GDP, and the benefits between 0.28% with the AD-DICE model and respectively 0.38% with the AD-WITCH model. Thus, this results a net benefit between 0.2 to 0.23% of world GDP (Appendix H). (Agrawala et al., 2010)

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5. The RICE-2011 model

Integrated assessment models are very convenient in a situation of increased focus on an integrated analysis of mitigation and adaptation strategies (van Vuuren et al., 2010). And because it can be concluded from previous chapters that a combination of approaches is needed, this chapter will conclude on the optimal amount of mitigation. When knowing the optimal amount of mitigation, the amount of economic damage can be calculated and a matching adaptation plan made.

The IAM used is the RICE-2011 model. It divides the world into 12 regions and focuses on the social cost of carbon (Hereafter SSC). The SSC measures the amount of economic damage resulting from a one extra unit of metric ton of carbon, or in other words the costs of pollution. It is calculated by dividing the marginal impact of emissions by the marginal welfare originating from the use of one extra unit of emissions in period t (Appendix I). Thus, the RICE-2011 model calculates the future damage from emissions discounted for time t. The welfare function used includes estimated economic damages to sectors as agriculture, the cost of sea-level rise, adverse impacts on health, non-market damages, and the potential damages by catastrophes (Nordhaus, 2011). In an optimized climate policy, the SSC will be equal to the carbon tax without considering market failure by

regulatory distortions and deadweight losses. (Nordhaus, 2011)

The RICE-2011 model makes 3 different runs: (1) with a standard model as described by Nordhaus (2010), including a base discount of 1.5%, (2) a low discount run of 1% to show the sensitivity to alternative discount rates, and (3) a near-zero discount run of 0.1% to compare the RICE-2011 model results with the estimates of the Stern review (2007). The discount rate, or chosen interest rate, in the RICE-2011 model is relatively high in the short run until the next decade which means that it puts a lower weight on damages in the distant future.

The results show how sensitive this model is to the different discount rates. The global SSC for 2015 in the first run is estimated at $42.68 per metric ton of carbon. With the discount rate of 1%, the global SCC is $138 per ton of carbon, and the global SSC run with the lowest time preference again higher: $288 per ton carbon in 2015 (Nordhaus, 2011).

If the EU wants to stay under the 2 degrees Celsius target, the global SSC increases with a factor of 2 to $100 per ton carbon for the base run for an average of 2 degrees Celsius. However, to make sure that the 2 degrees Celsius is a maximum, the SSC are even 3 times that of the base discount run. The SSC of carbon for the region of the EU sets the price at $4.11 in 2015 with the base (1.5%) run, and at $7.73 in the low (1%) discount run (Nordhaus, 2011). “This indicates the change in the present value of utility of that region scaled by consumption in the given year for that region” (Nordhaus, 2011).

However, it is arguable if the SSC should be embraced as this integrated assessment model relies on uncertain and debatable parameters: time preference, the index of relative risk aversion (Hereafter

IRRA), climate sensitivity, damage function, and catastrophic outcomes (Pindyck, 2013).

The parameter time preference is very important as climate change is not per se immediate but rather happening over a long time horizon. The question rises if it is ethical to discount the welfare

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of future generations compared to current welfare. However, this is a matter of personal value rather than economic principles (Pindyck, 2013). Another problematic parameter is the IRRA, which negatively influences the SSC. It reflects the aversion to consumption inequality between

generations. The range of the IRRA lies between 1 and 3, which is sufficiently large that any given IAM give wide variety of values for the SSC (Pindyck, 2013).

Another problem with the calculations of the SCC is the uncertainty of climate change. In the determination of the climate sensitivity, Pyndick (2013) argues: “the physical mechanisms that determine climate sensitivity involve crucial feedback loops, and the parameter values that

determine the strength (and even the sign) of those feedback loops are largely unknown, and for the foreseeable future may even be unknowable”. He also states that developers of IAM models just make up functional forms and corresponding parameter values when it comes to the damage function, because little known is about this.

Although the potential for abrupt and catastrophic climate change is included into the RICE-2011 model, the model does not build in a precise tipping point at a given temperature increase (Nordhaus, 2011).

Thus, as the height of SSC is very debatable and uncertain in its parameters, the (only) use of this without further thinking would not be recommendable. It should be seen as a guideline, a beginning of a mitigation policy, as insurance for the future. As Pindyck (2013) states: “Society would be paying for a guarantee that a low-probability catastrophe will not occur (or less likely)”.

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6.

EU response to climate change

This sub-chapter elaborates on how the EU should approach the undesirable effects of climate change. As can be concluded from the first chapter, adaptation as well as mitigation has several pros and cons, are interrelated, and are difficult to compare and use together because of mismatch in timescale, governing, and describing uncertainty.

However, as can be concluded from chapter two, a combination of the two approaches is necessary as a total reduction today will already lead to global warming with probably devastating outcomes. And mitigation will also be necessary as fossil fuels are a finite source, and because burning all fossil fuels would result into an inhabitable planet for humans.

The precise global mitigation path is difficult to predict until strict regulations are introduced on global quotas. Also a debate on intergenerational preferences and equity should be held to agree on the value of these parameters as these can change the height of the optimal amount of mitigation tremendously. Even with all these uncertainties, the EU should mitigate. In the long-term only adaptation is not an option, and mitigation takes time. Investing in renewable energy and changing consumption preferences will take time, perhaps too much time before the impacts of climate change become severe. Besides, mitigation is not necessarily a negative investment as it can create opportunities and employment. For example, instead of focussing on CO2 reductions to reduce climate change, the focus could lie on increasing energy security and should be seen as an investment in cheaper (sustainable) energy in the long term as fossil fuels will become more expensive when becoming scare.

The same applies for adaptation. Although a shortcoming in information can result in

mal-adaptation, the EU should embrace this approach. Not only because undesirable impacts resulting from climate change cannot be avoided altogether even with the most stringent mitigation path, but also because it can result in a more robust society more resilient against other socio-economic problems. Despite much adaptation does not need governmental incentives or support, the EU should help with the process especially when climate change consequences are transboundary. The EU should invest in “no regret” adaptation to increase the adaptive capacity, to increase the resilience of a society. For example, the EU could invest in drought resistant crops, as drought is already an existing problem in the South of Europe and an increasing problem in mid Europe as extreme weather events are very likely to increase even more. Or in flood defence if rivers or other water bodies are transboundary.

Further research is necessary to learn more about the relationship between adaptation and mitigation, consequences of temperature increase and emissions paths, tipping points, the actual size of the SSC, and much more. Then adjustments can be made on the amount of mitigation and adaptation needed to ensure that the undesirable impacts of climate change are minimized.

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7. Discussion

Climate change is one of the most complex problems, therefore an interdisciplinary approach is necessary to make a valuable conclusion about what the best approach would be for Europe in order to decrease the undesirable impacts of climate change the most. Not only geologic and economic science is necessary, but also political science, sociological science, psychology and probably many more in order to make a more valuable conclusion. However, even this completer picture would be far from complete, as future climate change is everything but certain. More research should be done at the geological, physical and economic consequences of GHG emissions.

Also further research should be done at the relationship between adaptation and mitigation, as the amount of adaptation also influences the benefits by mitigation and vice versa. So the optimal amount could be altered if this were taken into account. Also as not all adaptation is done after governmental incentives, most adaptation is done by local people, (e.g. farmers who alter their crops) this is hard to measure while should be taken into account.

Another point of discussion is to what extend the ethical side should be included in the amount of optimal form of adaptation and mitigation. To what extend can Europe, or any other region for that matter, let other (less developed) countries suffer for the actions we take and took in the past? This matter of ‘equity’ is also not taken into account in the RICE-2011 model. Equity weighting indicates that the damage done to poor people should weight more than the damage done to rich people, as rich people have more options. However, it is highly debatable which amount this should be. The difference between poor and rich does not only exist in space, but also in time. Henceforth future generations are believed to be richer, and should therefore pay a higher price. According to Nordhaus (2011): “Equity weighting tends to reduce the SCC relative to no equity weighting”. The extent of the reduction depends on the normalization and the parameters, but can be substantial”. The bottom line is that equity is a complicated affair, as reducing future damages by investing now may be valuable, but they are benefiting the rich in the future. It is even not certain if the future generation is richer.

8. Conclusion

Climate change has two main approaches to address the undesirable impacts of climate change: adaptation and mitigation. Both have their pros and cons. Adaptation has (1) the potential to reduce impacts of climate change, which is necessary as climate change is already inevitable. (2) The

benefits of adaptation are, opposite to mitigation, felt in the near term, and (3) incentives are already in place which means that governmental instruments are not always needed. (4) Often only local parties need to be involved instead of international stakeholders. Another benefit to

adaptation is (5) that a society more robust against climate change is also more robust against other socio-economic change.

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However, adaptation has financial, technical and political limits. (1) The economic costs could become very large, especially when a low mitigation path is chosen. When (2) the precise nature and incidence of climate change effects are uncertain, this can lead to maladaptation, which can make more damage costs than prevent them. And (3) it is questionable if pursuing a pathway of little mitigation and more adaptation is ethical.

This is the first advantage for mitigation, (1) it is more ethical as it is a public good.

Other pros of mitigation are (2) that it can create economic opportunities and higher living standards, and (3) it is less expensive than adaptation. Also (4) mitigation has a lot of co-benefits: near-term health improvements, improved energy security, sustainable agriculture and it can introduce more employment.

Mitigation must be based on an international understanding that origins, impact, scale and urgency require action that is global and collective. This brings foreword the biggest issue with mitigation: not all countries are willing to abate. (1) A genuine prisoner’s dilemma can result, (2) carbon leakage, and (3) a Green Paradox. Although mitigation relies on technological developments, (4) it can be argued that efficiency without sufficiency is lost and (5) can introduce risks. Last (6), developing countries who are better off with mitigation can also get worse, as less money will spend on health care in these countries by developed countries.

There are several arguments for a joint assessment for adaptation and mitigation, however this is complicated as they have (1) different descriptions of uncertainty. A mismatch of (2) spatial scale, and (3) timescale complicates the comparability. Last, as there is still little known about the interactions between one another and finding an optimum is difficult.

However, as not only adaptation or only mitigation is an option, a combination is necessary.

This temperature rise, resulting in economic damages, will not stop immediately, even when we stop emitting today. Therefore adaptation is necessary. As well as fossil fuel is a finite source, there should come an energy transition decade. Another argument implies that not only adaptation is a possible policy because the planet earth would become an inhabitable place for humans if all fossil fuels would be burnt.

The optimal combination of mitigation and adaptation can be expressed in the form of a carbon tax. This will lower the amount of CO2 emitted and the tax money can be spent on damage costs and adaptation. According to the RICE-2011 model, the global SSC should be $42.68 per metric ton in 2015, and for the EU the optimal amount of SSC would be ranging between $4.11 and $7.73. However, the amount of SCC from the RICE-2011 model is limited to uncertain and debatable parameters. Therefore the SSC should be seen as a guideline.

As well as mitigation and adaptation can also form net-benefits, it would be wise to invest as much as possible in adaptation to make the society more robust. Not only to combat climate change, but also other socio-economic problems that could occur more immediate. As well as to mitigate, not just to tackle the undesirable effects of climate change, rather to enhance the energy security.

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