Tuesday, June 26, 2012

Investment and growth in the time of climate change

EurActiv.com: European climate policy has to be flexible with respect to the outcome of international negotiations as well as updates in the evaluation of climate change, says a Bruegel analysis. Bruegel is an independent economic think tank in Brussels. "According to a joint report by Bruegel and the Economics Department of the European Investment Bank, decarbonisation is not necessarily detrimental to growth if the policy mix is well adapted to the issue.

Climate policy, like all policies, is about making choices. Taking an economic perspective, the report addresses two major choices of European decarbonisation policies. At the highest level, a decision has to be made whether climate change is best dealt with by reducing carbon emissions into the atmosphere (mitigation), or by investing into assets that allow people to better cope with the consequences of global warming (adaptation).

Then, the individual policies to curb emissions and incentivise adaptation investments have to be selected. Underlying these choices is the question of the economic impact of climate policies. Choosing decarbonisation is harder if it is connected to forgoing economic growth. Hence, it is important to understand whether economic growth and decarbonisation can go hand in hand, or if there are choices to be made. The report contributes to all three discussions.

...There is no self-contained optimal balance between mitigation and adaptation. The balance shifts more towards mitigation if we expect high damages through climate change, and if we care a lot about the welfare of future generations....

Sea defenses and drainage channel in the eastern UK, shot by Keith Rose, Wikimedia Commons via Geograph UK, under the Creative Commons Attribution-Share Alike 2.0 Generic license

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