Plan or React? Analysis of Adaptation Costs and Benefits Using Integrated Assessment Models

This report examines adaptation and mitigation within an integrated framework. Global and regional costs of adaptation are assessed dynamically and the resulting benefits are quantified. This is accomplished by developing a framework to incorporate adaptation as a policy variable within three Integrated Assessment Models (IAMs); the global Dynamic Integrated model of Climate and the Economy (DICE), the Regional Integrated model of Climate and the Economy (RICE), and the World Induced Technical Change Hybrid (WITCH) model. The framework developed here takes into account investments in reactive adaptation and in adaptation "stocks", as well as investments in building adaptive capacity. This report presents the first inter-model comparison of results on adaptation costs using the emerging category of adaptation-IAMs. Results show that least-cost policy response to climate change will need to involve subsantial amounts of mitigation efforts, investments in adaptation stock, reactive adaptation measures and adaptive capacity to limit the remaining damages.