One of the many urban adaptation themes I stressed in my 2010 Climatopolis book was the importance of updating risk maps in coastal cities. Information is power! If urbanites learn that their property is now in a flood zone (because climate change has caused encroachment) then they will change their behavior and invest in stilts and other strategies to cope with the "new normal". Today the NY Times reports that all of this is now taking place in NYC. The Times points out the irony that the risk maps were only in the process of being updated when Hurricane Sandy struck in late October 2012. This highlights that we need to invest in more GIS research and trusted objective risk evidence. Once this evidence is produced and publicized, insurance markets will price this new risk and differential price insurance policies to incentivize those at risk to invest in optimal precautions. Ehrlich and Becker 1972 is worth a re-read here!!
How far can adaptation take us in mitigating the challenge of climate change? For economists, the key issue here is that we live in a "second best world". Of course, carbon pricing is the first best solution. But, at the world level this isn't going to happen. When you release the genie of climate change, how far can human ingenuity and just common sense take us in helping us to cope with new challenges? As usual, economists are more optimistic about the substitution and innovation possibilities than the "Leontief" environmentalists.
