Abstract: Although climate policies have been so far mostly focused on mitigation, adaptation to climate change is a growing concern in developed and developing countries. This paper discusses how adaptation fits into the global climate strategy, at the global and national levels. To do so, a partial equilibrium optimization model of climate policies-which includes mitigation, proactive adaptation (ex ante), and reactive adaptation (ex post)-is solved without and with uncertainty. Mitigation, proactive adaptation, and reactive adaptation are found to be generally jointly determined. Uncertainty on the location of damages reduces the benefits of "targeted" proactive adaptation with regard to mitigation and reactive adaptation. However, no single country controls global mitigation policies, and budget constraints might make it difficult for developing countries to finance reactive adaptation, especially if climate shocks affect the fiscal base. Rainy-day funds are identified as a supplemental instrument that can alleviate future budget constraints while avoiding the risk of misallocating resources when the location of damages is uncertain.

Although climate policies have been so far mostly focused on mitigation, adaptation to climate change is a growing concern in developed and developing countries. This paper discusses how adaptation fits into the global climate strategy, at the global and national levels. To do so, a partial equilibrium optimization model of climate policies - which includes mitigation, proactive adaptation (ex ante), and reactive adaptation (ex post) - is solved without and with uncertainty. Mitigation, proactive adaptation, and reactive adaptation are found to be generally jointly determined. Uncertainty on the location of damages reduces the benefits of targeted proactive adaptation with regard to mitigation and reactive adaptation. However, no single country controls global mitigation policies, and budget constraints might make it difficult for developing countries to finance reactive adaptation, especially if climate shocks affect the fiscal base. Rainy-day funds are identified as a supplemental instrument that can alleviate future budget constraints while avoiding the risk of misallocating resources when the location of damages is uncertain.

We propose a macroeconomic model to assess optimal public policy decisions in the the face of competing funding demands for climate change action versus traditional welfare-enhancing capital investment. How to properly delineate the costs and benefits of traditional versus adaption-focused development remains an open question. The paper places particular emphasis on the changing level of risk and vulnerabilities faced by developing countries as they allocate investment toward growth strategies, adapting to climate change and emissions mitigation.

Climate change is mainly caused by emissions of CO2 from burning fossil fuels, which provides over 85% of the world’s energy. Strategies for mitigating climate change are connected with handling economic and social activities through their effects on the use of energy. Climate Change Mitigation investigates the costs of mitigation measures in comparison to their benefits, and compares the effects of implementing mitigation measures on various areas such as energy security and energy economy. “For 20 years, diplomats have struggled to make progress on climate change, mostly because global diplomacy is not well-linked to the realities of how nations and firms control emissions and adapt to the impacts of a changing climate. In this excellent book, Dr Yamaguchi has assembled experts to guide the redesign of global policy. The authors underscore how global warming efforts must resonate with other policy goals.” David G. Victor, Director, Laboratory on International Law and Regulation and Professor, University of California San Diego “Climate Change Mitigation clarifies that climate change cannot be controlled by sacrificing economic growth or other global problems; however, action to control climate change cannot be delayed.Climate policy is pervasive and affects all dimensions of international policy;but it cannot be too ambitious: a balanced approach between mitigation and adaptation, economic growth and resource management, and short term development and long term investments, should be adopted. I recommend its reading.” Carlo Carraro,President, Ca’ Foscari University of Venice “The International Energy Agency estimates for every $1 of investment now toward sustainable energy, $4 of future spending can be saved. There is a business case for companies to reduce energy use. Companies in the energy and resource intensive industries must lead the way.” Chad Holliday, Chairman. World Business Council for Sustainable Development and former Chair and CEO, DuPont

Global warming continues to gain importance on the international agenda and calls for action are heightening. Yet, there is still controversy over what must be done and what is needed to proceed. Policy Implications of Greenhouse Warming describes the information necessary to make decisions about global warming resulting from atmospheric releases of radiatively active trace gases. The conclusions and recommendations include some unexpected results. The distinguished authoring committee provides specific advice for U.S. policy and addresses the need for an international response to potential greenhouse warming. It offers a realistic view of gaps in the scientific understanding of greenhouse warming and how much effort and expense might be required to produce definitive answers. The book presents methods for assessing options to reduce emissions of greenhouse gases into the atmosphere, offset emissions, and assist humans and unmanaged systems of plants and animals to adjust to the consequences of global warming.

Public financial management (PFM) consists of all the government’s institutional arrangements in place to facilitate the implementation of fiscal policies. In response to the growing urgency to fight climate change, “green PFM” aims at adapting existing PFM practices to support climate-sensitive policies. With the cross-cutting nature of climate change and wider environmental concerns, green PFM can be a key enabler of an integrated government strategy to combat climate change. This note outlines a framework for green PFM, emphasizing the need for an approach combining various entry points within, across, and beyond the budget cycle. This includes components such as fiscal transparency and external oversight, and coordination with state-owned enterprises and subnational governments. The note also identifies principles for effective implementation of a green PFM strategy, among which the need for a strong stewardship located within the ministry of finance is paramount.