The document discusses the economic impacts of climate change, including the problem, its sources and mechanisms, possible futures, and consequences. It also discusses solutions, focusing on increasing adaptive capacity through available technologies, resources, human and social capital, risk sharing, information management, and decision making. However, future vulnerability depends on uncertain development status and the complex relationship between development, exposure, and adaptive capacity. While adaptation assistance could help reduce impacts, development assistance has proven difficult and adaptive capacity is closely tied to development.

1. Economic impacts
• The problem
– Sources
– Mechanisms
– Possible futures
– Consequences
• The solution

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Welfare-equivalentincomechange(inpercent)
Global warming (in degrees centrigrade)

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Income (in 2005 dollar per person per year)
1. Exposure
2. Limits / analogues
3. Adaptive capacity

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Welfare-equivalentincomechange(inpercent)
Temperature (in degrees centrigrade)
1. Exposure
2. Limits / analogues
3. Adaptive capacity

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1. Exposure
2. Limits / analogues
3. Adaptive capacity

6. Adaptive Capacity
• Adaptive capacity is the ability to adapt
• Adaptive capacity depends on
– Available technological options
– Available resources & their distribution
– Human capital
– Social capital
– Risk sharing
– Information management and attribution
– Decision making
• There is limited substitutability between
these factors

7. Dynamics
• Vulnerability to climate change is a
function of exposure and adaptive capacity,
both of which depend on development
status
• Future vulnerability will be very different
from current vulnerability
• Not only is future development uncertain,
but also the link between development,
exposure and adaptive capacity is unclear
• I will illustrate this with the case of
malaria

11. Schelling Conjecture
• Nobel Laureate Tom Schelling asked
– Why do we care about the grandchildren of
people we do not seem to care about?
– If we really do care about the impacts of
climate change on the descendants of the
current poor, are there better ways of helping
them than through greenhouse gas emission
reduction?
• Is adaptation assistance a better way to
reduce the impact of climate change?

12. Schelling Conjecture -2
• Is adaptation assistance a better way to
reduce the impact of climate change?
• Yes, if you could be sure to invent say a
malaria vaccine if you invested enough, and
would be sure it would use appropriately
• Adaptive capacity is complex, however, and
closely related to development
• Development assistance has proven
difficult

13. Schelling Conjecture -3
• Besides, poverty implies vulnerability in
general, but not always
• Richer people
– put higher values on health and environment
– tend to live longer and thus develop
cardiovascular diseases
– might buy air conditioning that heats their
environment