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The Effect of the Inclusion of Uncertainty on the Optimal Allocation of Resources to Climate Change Mitigation and Adaptation Programmes

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  • Bryan M. Maybee
  • Daniel J. Packey

Abstract

type="main" xml:id="ecpa12063-abs-0001"> How to deal with our changing climate is one of the most controversial topics facing modern society. The two most prevalent choices are to mitigate the effects through global programmes, or adapt to the changes at the local level. While both have positive and negative traits, the reality is that a combination of the two strategies is required. This is the second study in a series investigating the mitigation–adaptation balance from an economic perspective. Using an expected value approach, this study discusses the theoretical sources and impact of uncertainty associated with implementing a mitigation or adaptation programme on the strategic optimisation.

Suggested Citation

  • Bryan M. Maybee & Daniel J. Packey, 2014. "The Effect of the Inclusion of Uncertainty on the Optimal Allocation of Resources to Climate Change Mitigation and Adaptation Programmes," Economic Papers, The Economic Society of Australia, vol. 33(1), pages 67-75, March.
    • Handle: RePEc:bla:econpa:v:33:y:2014:i:1:p:67-75
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    File URL: http://hdl.handle.net/10.1111/ecpa.2014.33.issue-1
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    References listed on IDEAS

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    1. Bryan M. Maybee & Daniel J. Packey & Ronald D. Ripple, 2012. "Climate Change Policy: The Effect of Real Options Valuation on the Optimal Mitigation-Adaptation Balance," Economic Papers, The Economic Society of Australia, vol. 31(2), pages 216-224, June.
    2. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
    3. Leo Dobes, 2008. "Getting Real about Adapting to Climate Change: Using ‘Real Options’ to Address the Uncertainties," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 15(3), pages 55-72.
    4. World Bank, 2010. "Economics of Adaptation to Climate Change : Synthesis Report," World Bank Publications - Reports 12750, The World Bank Group.
    5. Robert Mendelsohn, 2009. "Climate Change and Economic Growth," World Bank Publications - Books, The World Bank Group, number 28000.
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