How Harmful are Adaptation Restrictions

The dominant assumption in economic models of climate policy remains that adaptation will be implemented in an optimal manner. There are, however, several reasons why optimal levels of adaptation may not be attainable. This paper investigates the effects of suboptimal levels of adaptation, i.e. adaptation restrictions, on the composition and level of climate change costs and on welfare. Several adaptation restrictions are identified and then simulated in a revised DICE model, extended with adaptation (AD-DICE). We find that especially substantial over-investment in adaptation can be very harmful due to sharply increasing marginal adaptation costs. Furthermore the potential of mitigation to offset suboptimal adaptation is investigated. When adaptation is not possible at extreme levels of climate change, it is cost-effective to use more stringent mitigation policies in order to keep climate change limited, thereby making adaptation possible. Furthermore not adjusting the optimal level of mitigation to these adaptation restrictions may double the costs of adaptation restrictions, and thus in general it is very harmful to ignore existing restrictions on adaptation when devising (efficient) climate policies.Integrated Assessment Modelling, Adaptation, Climate Change

What does Paris mean for Africa? An Integrated Assessment analysis of the effects of the Paris Agreement on African economies. ESRI Working Paper 690 December 2020.

Climate change is considered the biggest environmental challenge facing the world. The expected concomitant economic impacts of climate change are substantial, where the African continent is expected to be particularly vulnerable. Research is needed to support the development of sound climate policies in Africa. This paper develops a new Integrated Assessment Model -AD-AFRICA- which allows a comprehensive analysis of climate change impacts and adaptation in Africa. The AD-AFRICA model divides Africa into five regions and includes seven specific climate change impacts. The effects of the Paris agreement Intended Nationally Determined Contributions (INDCs) and the below 2 degrees target are investigated. The results show that though the INDCs reduce impacts, reaching the goal of the agreement will further reduce impacts by almost 1.6 % of GDP (588,731 US$Billion). This highlights the importance of re-examining the level of INDCs. Furthermore, our results show that health and tourism impacts are highest and that different regions in Africa are more vulnerable to different climate change impacts depending on their level of development and regional characteristics. Finally, the withdrawal of the US from the Paris Agreement would result in an additional climate change burden of around 87 US$ Billions to Africa

AD-DICE: an implementation of adaptation in the DICE model

Integrated Assessment Models (IAMS) have helped us over the past decade to understand the interactions between the environment and the economy in the context of climate change. Although it has also long been recognized that adaptation is a powerful and necessary tool to combat the adverse effects of climate change, most IAMs have not explicitly included the option of adaptation in combating climate change. This paper adds to the IAM and climate change literature by explicitly including adaptation in an IAM, thereby making the trade-offs between adaptation and mitigation visible. Specifically, a theoretical framework is created and used to implement adaptation as a decision variable into the DICE model. We use our new AD-DICE model to derive the adaptation cost functions implicit in the DICE model. In our set-up, adaptation and mitigation decisions are separable and AD-DICE can mimic DICE when adaptation is optimal. We find that our specification of the adaptation costs is robust with respect to the mitigation policy scenarios. Our numerical results show that adaptation is a powerful option to combat climate change, as it reduces most of the potential costs of climate change in earlier periods, while mitigation does so in later periods.integrated assessment modelling, adaptation, climate change

International Cooperation on Climate Change Adaptation from an Economic Perspective

This paper investigates the economic incentives of countries to cooperate on international adaptation financing. Adaptation is generally implicitly incorporated in the climate change damage functions as used in Integrated Assessment Models. We replace the implicit decision on adaptation with explicit adaptation in a multi-regional setting by using an adjusted RICE model. We show that making adaptation explicit will not affect the optimal mitigation path when adaptation is set at its optimal level. Sub-optimal adaptation will, however, change the optimal mitigation path. Furthermore this paper studies for different forms of cooperation what effects international adaptation transfers will have on (i) domestic adaptation and (ii) the optimal mitigation path. Adaptation transfers will fully crowd out domestic adaptation in a first best setting. Transfers will decrease overall mitigation in our numerical simulations. An analytical framework is used to analyse the most important mechanisms and a numerical model is used to assess the magnitude of effects.Climate Change, Adaptation Funding, Integrated Assessment Modeling

Technical documentation of I3E model, Version 3. ESRI Survey and Statistical Report Series 91 May 2020.

This paper provides a technical description of the Ireland Environment, Energy and Economy (I3E) model. The I3E model is an intertemporal computable general equilibrium model with multiple firms, one representative household group, multiple commodities, government, enterprises, and rest of the world accounts. It describes the Irish economy in sectoral detail. This model includes a detailed description of energy inputs and concomitant greenhouse gas emissions and has been developed with the purpose of investigating the economic and environmental impacts of climate policies for Ireland. After each major development of the model, an updated version of this report is published. The current report belongs to the third version of the model

Optimal climate policy with fat-tailed uncertainty: What the models can tell us. ESRI Working Paper 697 March 2021.

We present a modification of the most commonly used integrated assessment model (IAM) of climate change (DICE-2016), AD-DICE2016, which is designed to address three key aspects of climate economy models: treatment of uncertainty, the use of more appropriate utility functions, and including adaptation policies to climate change. These modifications ensure that two of the key difficulties identified with IAMs, the choice of the risk aversion parameter and the underestimation of damages, are also directly addressed. The use of a bounded (Burr) utility function ensures that the model is able to appropriately assess the effects of parameters whose distributions have “fat tails”. Uncertainty is accommodated via the state-contingent approach enabling us to include more state (seven) and control variables (four) than recursive derivatives of DICE. Our approach to uncertainty ensures that the optimal climate policies account for outcomes in every possible state, unlike the Monte Carlo approach. Our treatment of uncertainty is extensive: eight parameters are allowed to be random, with distributions –many “fat tailed”– identified using current knowledge. Our model suggests that uncertainty regarding damages and climate sensitivity are key drivers of climate policy. We also find that uncertainty leads to increases in both optimal mitigation and adaptation, with adaptation and mitigation reacting differently to uncertainty over different parameters. Finally, our estimates of the social cost of carbon are larger when uncertainty is allowed for and significantly affected by adaptation

The use of the I3E model in macroeconomic analysis for the Irish economy. ESRI Working Paper 679 September 2020.

The I3E (Ireland Environment, Energy and Economy) model is a single-country, intertemporal computable general equilibrium (CGE) model focusing on environmental policies in Ireland. However, the depth of its modelling, which incorporates the economic interactions between production sectors and other agents, also facilitates its use in wider macroeconomic policy analysis. In the Economic and Social Research Institute (ESRI), there are several macroeconomic models developed and applied to investigate macroeconomic policy issues. These are HERMES (Harmonised Econometric Research for Modelling Economic Systems), COSMO (COre Structural MOdel), and FIR-GEM (Fiscal Irish General Equilibrium Model). As with all economic models, the four models vary in their underlying mechanisms and methodologies, and each model has its associated advantages and disadvantages. The focus of this paper is to show the consistency of the I3E model when compared with these existing models. To do so, we compare the results of four different scenarios, and we find that the results of these shocks when applied to the I3E model are largely in line with the respective results of the other three models. Furthermore, any differences can be explained by the different modelling techniques and/or assumptions. As such, we consider the I3E model to be a reliable tool to be used for both environmental policy analysis, and wider macroeconomic policy analysis on the whole

International Cooperation on Climate Change Adaptation from an Economic Perspective. ESRI WP323. October 2009

What role could a property tax play in broadening the Irish tax base? Could a recurrent tax on immovable property provide greater stability than a system of stamp duties, while removing obstacles to mobility? What about the relationship between a property tax and ability to pay – should or could the bills facinThis paper investigates the economic incentives of countries to cooperate on international adaptation financing. Adaptation is generally implicitly incorporated in the climate change damage functions as used in Integrated Assessment Models. We replace the implicit decision on adaptation with explicit adaptation in a multi-regional setting by using an adjusted RICE model. We show that making adaptation explicit will not affect the optimal mitigation path when adaptation is set at its optimal level. Sub-optimal adaptation will, however, change the optimal mitigation path. Furthermore this paper studies for different forms of cooperation what effects international adaptation transfers will have on (i) domestic adaptation and (ii) the optimal mitigation path. Adaptation transfers will fully crowd out domestic adaptation in a first best setting. Transfers will decrease overall mitigation in our numerical simulations. An analytical framework is used to analyse the most important mechanisms and a numerical model is used to assess the magnitude of effects.g those with valuable houses and little income be reduced or eliminated without making a property tax a quasi-income tax? These are among the questions explored in this paper, which provides a broad picture of the issues, illustrated by detailed microsimulation of the impact of specific forms of property tax

Phosphorylation of the MBF Repressor Yox1p by the DNA Replication Checkpoint Keeps the G1/S Cell-Cycle Transcriptional Program Active

Background: In fission yeast Schizosaccharomyces pombe G1/S cell-cycle regulated transcription depends upon MBF. A negative feedback loop involving Nrm1p and Yox1p bound to MBF leads to transcriptional repression as cells exit G1 phase. However, activation of the DNA replication checkpoint response during S phase results in persistent expression of MBF-dependent genes.Methodology/Principal Findings: This report shows that Yox1p binding to MBF is Nrm1-dependent and that Yox1p and Nrm1p require each other to bind and repress MBF targets. In response to DNA replication stress both Yox1p and Nrm1p dissociate from MBF at promoters leading to de-repression of MBF targets. Inactivation of Yox1p is an essential part of the checkpoint response. Cds1p (human Chk2p) checkpoint protein kinase-dependent phosphorylation of Yox1p promotes its dissociation from the MBF transcription factor. We establish that phosphorylation of Yox1p at Ser114, Thr115 is required for maximal checkpoint-dependent activation of the G1/S cell-cycle transcriptional program.Conclusions/Significance: This study shows that checkpoint-dependent phosphorylation of Yox1p at Ser114, Thr115 results in de-repression of the MBF transcriptional program. The remodeling of the cell cycle transcriptional program by the DNA replication checkpoint is likely to comprise an important mechanism for the avoidance of genomic instability

The Fission Yeast Homeodomain Protein Yox1p Binds to MBF and Confines MBF-Dependent Cell-Cycle Transcription to G1-S via Negative Feedback

The regulation of the G1- to S-phase transition is critical for cell-cycle progression. This transition is driven by a transient transcriptional wave regulated by transcription factor complexes termed MBF/SBF in yeast and E2F-DP in mammals. Here we apply genomic, genetic, and biochemical approaches to show that the Yox1p homeodomain protein of fission yeast plays a critical role in confining MBF-dependent transcription to the G1/S transition of the cell cycle. The yox1 gene is an MBF target, and Yox1p accumulates and preferentially binds to MBF-regulated promoters, via the MBF components Res2p and Nrm1p, when they are transcriptionally repressed during the cell cycle. Deletion of yox1 results in constitutively high transcription of MBF target genes and loss of their cell cycle–regulated expression, similar to deletion of nrm1. Genome-wide location analyses of Yox1p and the MBF component Cdc10p reveal dozens of genes whose promoters are bound by both factors, including their own genes and histone genes. In addition, Cdc10p shows promiscuous binding to other sites, most notably close to replication origins. This study establishes Yox1p as a new regulatory MBF component in fission yeast, which is transcriptionally induced by MBF and in turn inhibits MBF-dependent transcription. Yox1p may function together with Nrm1p to confine MBF-dependent transcription to the G1/S transition of the cell cycle via negative feedback. Compared to the orthologous budding yeast Yox1p, which indirectly functions in a negative feedback loop for cell-cycle transcription, similarities but also notable differences in the wiring of the regulatory circuits are evident