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The thirteenth Conference of the Parties to the United Nations Framework Convention on Climate Change in 2007 decided that developing countries should be compensated for adaptation costs to climate change through the Adaptation Fund (first draft decision of the third session of the conference of the parties serving as the meeting of the parties to the Kyoto Protocol). This shows that adaptation to climate change has become important in international climate negotiations. Today, adaptation is widely recognized as an equally important and complementary response to climate change mitigation (for example, Commission of the European Communities 2007; IPCC 2007a; Agrawala and Fankhauser 2008).
Still, relatively little information is available to support more integrated climate policies that focus on both mitigation and adaptation (Klein et al. 2005). In particular, in integrated assessment models that aim at supporting climate policy by analysing their economic and environmental consequences and formulating efficient responses, explicit consideration of adaptation is still in its infancy (Tol 2005; Wilbanks 2005; Agrawala et al. 2008).
This chapter tries to fill the gap in integrated assessment models by integrating adaptation and residual damage functions from AD-RICE (de Bruin et al. 2009) with the FAIR model (den Elzen and van Vuuren 2007; Hof et al. 2008). This version of the FAIR model (from now on called AD-FAIR) enables an analysis of the interactions between mitigation, emissions trading, adaptation and residual damages (that is, damages not avoided by adaptation measures) on a global as well as regional scale. Furthermore, adaptation is modelled explicitly as a policy variable, providing insights in the economic consequences of adaptation. This information is vital for effective adaptation governance.
A major question in negotiations on international climate mitigation is how to allocate future greenhouse gas emission reduction targets among countries. For this reason, many proposals for allocating emission reductions among countries have been developed (Aldy et al. 2003; Bodansky 2004; Kameyama 2004; Torvanger and Godal 2004; Blok et al. 2005; Gupta et al. 2007; Hof et al., this volume, Chapter 4). Most of these proposals are based on one or more equity principles. According to these principles, emission reductions are allocated on the basis of current emissions (sovereignty principle), population (egalitarian principle), gross domestic product (GDP) (ability to pay principle) or their share of responsibility for climate change (polluter-pays principle) (Rose et al. 1998; Hof et al., this volume, Chapter 4). Another type of proposal takes specific national circumstances better into account by basing emission allocations on sectoral targets. This could potentially help improve the involvement of private actors, since targets are set for market-based sectors instead of for the national government.
The basic idea of this sectoral target approach is that sectors need to improve their efficiency to the same international level over time. The advantages are equal treatment of international competitive sectors in all countries, detailed consideration of mitigation potential and increased technological transfer. However, it also involves some disadvantages, one of the most important being the need for detailed information about efficiencies and emissions for a large number of subsectors for all countries (Baron et al. 2007). Höhne et al. (2008) conclude that such detailed information will not be available in the short term.
The thirteenth conference of the parties of the climate convention had launched a negotiation process to craft a new international climate change agreement by the end of 2009. This agreement would need to stipulate emission reduction commitments, specify essential actions to adapt to the impacts of climate change and mobilize the necessary funding and technological innovation. Given these enormous challenges, the structure and design of a future climate agreement are still unclear. Besides the negotiations within the UN climate regime, major greenhouse gas emitting countries are also leading ad hoc debates in other forums, for example in the context of the Group of Eight and the Asia–Pacific Partnership on Clean Development and Climate. Depending on the course of these processes, a new climate governance regime could develop in different directions; it could end somewhere between a universal, inclusive governance architecture and a strongly fragmented, heterogeneous governance architecture (Biermann et al., this volume, Chapter 2).
In recent years, numerous universal and fragmented climate regimes have been proposed (for an overview, see Bodansky 2004; Blok et al. 2005; Philibert 2005; IPCC 2007: 770–773). Many of these regimes are quantitatively or qualitatively assessed, but no attempt has yet been made to compare the costs estimates of these studies for specific regions under different regimes. Nevertheless, the available material allows us to make an assessment of the regional costs of several universal and fragmented regimes, based on different models. This chapter presents a literature review concerning the economic effectiveness of a number of possible universal and fragmented regimes. We use only studies that quantitatively assess both emission reductions and costs. From a quantitative perspective, this chapter tries to answer the appraisal question of the ‘architecture’ domain of this book, namely whether a universal or a fragmented regime will be more effective to reduce greenhouse gas emissions.
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