Toward Economic Evaluation of Climate Change

Efforts to assess climate change have generally been unsuccessful in describing the economic damages (or benefits) associated with climate change or the functional relationship of damage (or benefits) to climate. Existing integrated economic studies have developed an aggregate damage estimate for the United States associated with equilibrium doubled trace gas climate that is unlikely to occur for 100 years or more. These estimates are used to extrapolate damages to other regions and over time. There is little or no basis for such extrapolation. It is possible to introduce climate explicitly into standard economic models but such models have generally not been estimated. Potentially affected sectors include 1) forestry and ecosystems 2) agriculture 3) coast 4) fisheries 5) water resources and 6) communities and households. An impact classification system is developed that considers short and long run flexibility to adapt to climate change, the existing knowledge or capacity to adapt. and the degree to which climate matters after adaptation (i.e the degree to which damages can be avoided).