Adaptor of last resort? An economic perspective on the government’s role in adaptation to climate change

Abstract Individuals and societies have always adapted to change, whether catastrophic or slow onset. Over the last two centuries, however, governments have significantly extended their role as ultimate social manager of risk.  It is as yet unclear whether, how, or to what extent governments will add adaptation to climate change to their portfolio of responsibilities.  This report investigates this question on the basis of review and analysis of economic and policy thinking on the issues, and by using a new dataset on the 2011 Brisbane flood. Uncertainties about the future impacts of climate change obviate definitive conclusions about future adaptation actions and insights for specific situations cannot be generalised.  Economic precepts suggest that governments should limit intervention to cases of genuine market failure, such as the provision of information on likely impacts of climate change including at the local level, or to support for people affected by uninsurable events.  But any role as ‘insurer of last resort’ needs to be circumscribed by rigorous social cost-benefit analysis to ensure that government intervention is beneficial, in the context of the need to adapt to climatic changes.  Although the phenomenon of ‘government failure’ is generally ignored in the adaptation literature (and often by policy makers), it too can stymie efficient adaptation.  A standard justification for government intervention is market failure, including misperception of risk by individuals and businesses.  We use Brisbane property prices before and after the January 2011 flood, as well as property-level flood risk information to test the hypothesis that buyers do not accurately perceive the risk of riverine flooding.  The results indicate that buyers do take risk into account, and even discriminate between zones of differing flood risk.  The concepts of ‘government as insurer of last resort’ and ‘government as insurer of first resort’ as alternative forms of intervention in markets are examined with a view to disambiguation.  In contrast to much current thinking in academic and government circles, we conclude that the government should not act as an ‘adaptor of first or last resort’.  Rather, government can best contribute to efficient adaptation by reducing the economic costs and institutional barriers to adaptation faced by individuals and organisations.Comprehensive micro-economic reform, and the promotion of institutional flexibility are potential ‘no regrets’ strategies because they will also promote economic growth and welfare.Please cite as: Dobes, L, Jotzo, F, Doupé, P 2013 Adaptor of last resort? An economic perspective on the Government’s role in adaptation to climate change, National Climate Change Adaptation Research Facility, Gold Coast, pp. 81.Individuals and societies have always adapted to change, whether catastrophic or slow onset. Over the last two centuries, however, governments have significantly extended their role as ultimate social manager of risk.  It is as yet unclear whether, how, or to what extent governments will add adaptation to climate change to their portfolio of responsibilities.  This report investigates this question on the basis of review and analysis of economic and policy thinking on the issues, and by using a new dataset on the 2011 Brisbane flood. Uncertainties about the future impacts of climate change obviate definitive conclusions about future adaptation actions and insights for specific situations cannot be generalised.  Economic precepts suggest that governments should limit intervention to cases of genuine market failure, such as the provision of information on likely impacts of climate change including at the local level, or to support for people affected by uninsurable events.  But any role as ‘insurer of last resort’ needs to be circumscribed by rigorous social cost-benefit analysis to ensure that government intervention is beneficial, in the context of the need to adapt to climatic changes.  Although the phenomenon of ‘government failure’ is generally ignored in the adaptation literature (and often by policy makers), it too can stymie efficient adaptation.  A standard justification for government intervention is market failure, including misperception of risk by individuals and businesses.  We use Brisbane property prices before and after the January 2011 flood, as well as property-level flood risk information to test the hypothesis that buyers do not accurately perceive the risk of riverine flooding.  The results indicate that buyers do take risk into account, and even discriminate between zones of differing flood risk.  The concepts of ‘government as insurer of last resort’ and ‘government as insurer of first resort’ as alternative forms of intervention in markets are examined with a view to disambiguation.  In contrast to much current thinking in academic and government circles, we conclude that the government should not act as an ‘adaptor of first or last resort’. Rather, government can best contribute to efficient adaptation by reducing the economic costs and institutional barriers to adaptation faced by individuals and organisations.Comprehensive micro-economic reform, and the promotion of institutional flexibility are potential ‘no regrets’ strategies because they will also promote economic growth and welfare.Please cite as: Dobes, L, Jotzo, F, Doupé, P 2013 Adaptor of last resort? An economic perspective on the Government’s role in adaptation to climate change, National Climate Change Adaptation Research Facility, Gold Coast, pp. 81.&nbsp

Reduced deforestation and economic growth

The clearing of forests for agricultural land and other marketable purposes is a welltrodden path of economic development. With these private benefits from deforestation come external costs: emissions from deforestation currently account for 12 per cent of global carbon emissions. A widespread intervention in reducing emissions from deforestation will affect the paths of agricultural expansion and economic growth of lower income nations. To investigate these processes, this paper presents a general, dynamic, stochastic model of deforestation and economic growth. The model is shown to generate unique deforestation and investment paths and a model without reduced deforestation policy is shown to have a stationary distribution of income and landholdings. There are three main findings. First, in the short run national output growth falls with compensation for reduced deforestation. Second, deforestation rates are reduced through compensating either reduced deforestation directly or the stock of forests; however, compensating the stock of forests is likely to be prohibitively expensive. Finally, by offering a fixed compensation rate, as opposed to a compensation rate tied to a stochastic carbon price, further reductions in deforestation can be achieved

The costs of error in setting reference rates for reduced deforestation

To measure the deforestation reduced by a policy, we need to compare deforestation rates under a policy with deforestation rates in the absence of policy. Unfortunately the deforestation rate in the absence of a policy, or reference rate, is ex ante difficult to forecast and ex post impossible to observe. This means that reference rates will be set with error and we will not know how large the error will be. The challenging nature of setting reference rates is reflected in the number of proposals for reference rate design. In this paper I show how these proposals ignore forecast error. As a consequence, these proposals have basic structural weaknesses that increase the costs of reduced deforestation policy. I propose that a criteria for reference rates is to minimise the cost of forecast error. These ideas are illustrated with a cross country dataset on agricultural expansion. I show that the best forecasting model differs by country and that a country’s best forecasting model can be very simple

Interventions and strategies involving primary healthcare professionals to manage emergency department overcrowding: a scoping review

Objectives To conduct a scoping review to identify and summarise the existing literature on interventions involving primary healthcare professionals to manage emergency department (ED) overcrowding.Design A scoping review.Data sources A comprehensive database search of Medline (Ovid), EMBASE (Ovid), Cochrane Library (Wiley) and CINAHL (EBSCO) databases was conducted (inception until January 2020) using peer-reviewed search strategies, complemented by a search of grey literature sources.Eligibility criteria Interventions and strategies involving primary healthcare professionals (PHCPs: general practitioners (GPs), nurse practitioners (NPs) or nurses with expanded role) to manage ED overcrowding.Methods We engaged and collaborated, with 13 patient partners during the design and conduct stages of this review. We conducted this review using the JBI guidelines. Two reviewers independently selected studies and extracted data. We conducted descriptive analysis of the included studies (frequencies and percentages).Results From 23 947 records identified, we included 268 studies published between 1981 and 2020. The majority (58%) of studies were conducted in North America and were predominantly cohort studies (42%). The reported interventions were either ‘within ED’ (48%) interventions (eg, PHCP-led ED triage or fast track) or ‘outside ED’ interventions (52%) (eg, after-hours GP clinic and GP cooperatives). PHCPs involved in the interventions were: GP (32%), NP (26%), nurses with expanded role (16%) and combinations of the PHCPs (42%). The ‘within ED’ and ‘outside ED’ interventions reported outcomes on patient flow and ED utilisation, respectively.Conclusions We identified many interventions involving PHCPs that predominantly reported a positive impact on ED utilisation/patient flow metrics. Future research needs to focus on conducting well-designed randomized controlled trials (RCTs) and systematic reviews to evaluate the effectiveness of specific interventions involving PHCPs to critically appraise and summarise evidence on this topic