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Economic aspects of adaptation to climate change: integrated assessment modelling of adaptation costs and benefits

This report seeks to inform critical questions with regard to policy mixes of investments in adaptation and mitigation, and how they might vary over time. The report develops a framework to explicitly incorporate adaptation as a policy variable in two Integrated Assessment Models (IAMS) which have long been used for analysis of mitigation options: the global Dynamic Integrated model for Climate and Economy (DICE), and its regional counterpart, the regional Integrated model for Climate and the Economy (RICE). These modified models are calibrated and used in a number of policy simulations to examine the distribution of adaptation costs, and the interaction between adaptation and mitigation. Adaptation cost curves are estimated for the world, as well as for specific regions. The policy simulations presented in this report show that the costs of inaction are high, and thus it is more important to start acting on both mitigation and adaptation now.