Work

Optimal adaptation policies under a carbon budget constraint

Year: 2025

Type: article

Abstract: We develop a dynamic model of energy use that relies on three primary sources: a ‘dirty’ fossil resource, a ‘clean’ fossil resource equipped with a specific abatement device, and a carbon-free renewable energy source . The total amount of carbon emissions is limited by a given carbon budget . Expenditures on adaptation measures can expand this budget by increasing society’s tolerance to the effects of climate change . Therefore, we make the carbon budget endogenous and dependent on the adaptation effort. Within this framework, we study the trade-offs between mitigation (achieved through energy substitutions and abatement) and adaptation to relax the climate constraint imposed by the carbon budget. We find that, without any abatement option, adaptation measures are only taken once carbon concentrations reach a minimum tolerance level for society. On the other hand, when abatement is possible, the economy should start implementing it as soon as it begins adapting. Over time, both abatement and adaptation efforts will increase until the economy reaches a point where it prefers to fully abate carbon emissions rather than investing further in adaptation. We refer to this point as the maximum adaptation frontier.

Source: Resource and Energy Economics

DOI: 10.1016/j.reseneeco.2025.101481

Authors: Jean-Pierre Amigues, Gilles Lafforgue

Institutions: Institut National de Recherche pour l'Agriculture, l'Alimentation et l'Environnement, Toulouse School of Economics, TBS Education

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $3,200