Adaptation

Adaptation is investment and behavior change that reduces the damage caused by climate change, such as flood losses, heat stress, drought risk, or coastal exposure.

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Adaptation vs mitigation

Mitigation reduces greenhouse-gas emissions so future warming is smaller. Adaptation reduces the harm caused by the warming that occurs. The two are complements: weaker mitigation raises the amount of adaptation needed later.

A simple economic model

Let (A) be adaptation effort. A common framing is:

$$ \min_A ; C(A) + D(A) $$

where (C(A)) is the cost of adaptation and (D(A)) is expected climate damage after adaptation. The efficient level balances the extra cost of more protection against the extra damage it avoids.

Why markets alone may underprovide adaptation

Private incentives can be too weak because:

some benefits spill over to neighbors or future residents,
information about local climate risk is a public good,
credit constraints block efficient investment,
low-income households are often the most exposed but least able to pay.

Policy context

Governments use zoning, building codes, flood defenses, emergency planning, insurance design, and infrastructure spending to support adaptation. Economists care not only about total damages avoided, but also about who can afford to adapt and who is left exposed.

Knowledge Check

### Adaptation differs from mitigation because adaptation: - [x] reduces damages from climate change that occurs - [ ] eliminates the need to cut emissions - [ ] always lowers global temperature directly - [ ] only applies to firms, not households or governments > **Explanation:** Adaptation manages consequences; mitigation targets the emissions that cause climate change. ### In the simple adaptation model, the policy problem is to choose $A$ to minimize: - [x] adaptation costs plus remaining climate damage - [ ] emissions only - [ ] output only - [ ] taxes only > **Explanation:** The efficient choice balances the cost of extra protection against the damages it prevents. ### Why might markets alone underprovide adaptation? - [x] because adaptation often involves externalities, information problems, and credit constraints - [ ] because climate damages affect no one else - [ ] because adaptation has zero upfront cost - [ ] because governments are always unnecessary > **Explanation:** Flood defenses, early-warning systems, and resilient infrastructure often have shared benefits that private actors cannot fully capture.