One of the most difficult issues related to integrated assessment modelling is to capture the social economic implications of climate change impacts and policy in the presence of uncertainty. Uncertainty is paramount in climate change sciences and stems from different levels: uncertainty about climate responses, uncertainty about environmental responses (impacts) to climatic stimuli, uncertainty about the social economic responses to both environmental impacts and climate change policies, (i.e. on their costs and effectiveness). Against this background, it is particularly important to explicitly consider the spatial specificities of both climate-change impacts and, consequently, adaptation option. Both are highly differentiated geographically, therefore an appropriate spatial resolutions in assessment exercises (and models) is equally important for the “right” evaluation and prioritisation of adaptation actions.
In the light of this, in its first part, this report proposes one specific method to incorporate uncertainty in the WITCH integrated assessment model. The approach followed is that of “risk premium”. By estimating and explicating risk aversion attitudes in representative agents affected by climate change damages it is possible to construct a climate change social damage function “augmented” by the perceived risk. This new function will then be used to investigate how risk can influence both mitigation and adaptation choices as part of the analysis developed in WP6. In its second part, this report develops and tests a method to investigate spatial differences in climate change impacts on agriculture in terms of land use changes. Agriculture is obviously one sector where spatial heterogeneity plays a major role both in the definition of impacts and in the choice of adaptation strategies. Furthermore, it is one of the key impact areas that the BASE project analyses with a sectorial approach. The deliverable describes the methodology followed to develop an integrated modelling framework (SARA) that will allow for an integrated analysis of adaptation pathways also part of the research activity developed in BASE WP6.
These two lines of research are at the moment parallel, however they will be integrated, later on, in the project. More specifically, the macroeconomic investigation on the strategic complementarity between mitigation and adaptation conducted with the AD-WITCH model, with and without risk, will also incorporate information provided by all the sectorial analyses developed within BASE, thus including also those performed with the SARA framework. In particular, AD-WITCH will incorporate in the calibration of its impact-adaptation functions related to agriculture, cost and effectiveness information provided by the SARA framework.