This article reviews the economic and analytical challenges of adaptation to climate change. Adaptation to climate risks that can no longer be avoided is an important aspect of the global response to climate change. Humans have always adapted to changing climatic conditions, and there is growing, if still patchy, evidence of widespread adaptation behaviour. However, adaptation is not “autonomous”, as sometimes claimed. It requires knowledge, planning, coordination and foresight. There are important adaptation gaps, behavioural barriers and market failures, which hold back effective adaptation and require policy intervention. We identify the most urgent adaptation priorities, areas where delay might lock in future vulnerability, and outline the decision-making challenges of adapting to an unknown future climate. We also highlight the strong inter-linkages between adaptation and economic development, pointing out that decisions on industrial strategy, urban planning and infrastructure investment all have strong bearing on future vulnerability to climate change. We review the implications of these links for adaptation finance, and what the literature tells us about the balance between adaptation and mitigation.

Posted with permission from the Annual Review of Resource Economics, Volume 9
© 2017 Annual Reviews,

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