Economics, Institutions and Adaptation to Climate Change
Adaptation to climate change has attracted increasing interest as a necessary complement to greenhouse gas mitigation. Economic approaches to climate adaptation are rarely articulated and discussed explicitly despite the many benefits of such a framework-level discourse. Addressing this gap the article investigates how climate adaptation is approached in economics and how institutional economics may contribute to the development of the field. First, the paper identifies and critically reviews four major strands of current climate adaptation economics: estimation of adaptation benefits and costs, strategies for adaptation, the role of markets and governments, and policy instruments for adaptation. While having their merits, serious methodical difficulties prevail. Moreover, the applied neoclassical framing seems too narrow to capture the plethora of governance challenges and normative criteria revealed in adaptation policy discourses and in the adaptation literature. The article’s second part outlines an institutional economics approach to climate adaptation that addresses caveats in the current state-of-the-art and offers additional concepts to study adaptation. It also presents promising research strategies from institutional approaches to the environment and derives future research directions for climate adaptation economics. In the last step the paper assesses the normative foundations of climate adaptation economics and their implications for positive adaptation research.