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Project 10:
Economic policy for climate change
in Australia and the region
(in-practice title for
“Adaptation and economic responses to climate change” )
Frank Jotzo
Research School of Pacific and Asian Studies, ANU
Context, topic and aims of the research
Improve the understanding of economic responses to climate change,
and of options for policy
– economic system response to environmental change
– role of economic policy for climate change adaptation
– engaging Australia’s region, incl in climate change mitigation
Focus on Australia’s future challenges
– take into account experiences from around the world
– explore economic adaptation issues in neighbouring countries
Links to the region esp Indonesia
– establish and strengthen links to researchers in the region
– facilitate dialogue with policymakers both ways
Aim to produce policy-relevant knowledge
Associated researchers
Dr Jack Pezzey (ANU)
– economics of climate change and policy, mitigation
Dr Regina Betz (UNSW)
– climate policy instruments, experimental ec’s
Dr Budy Resosudarmo (ANU)
– Indonesian environmental ec’s and policy
Dr Pierre v.d. Eng (ANU)
– economic history of environmental change
Dr Jean-Pascal Bassino (U Montpellier)
– economic history of environmental change
Scope of the project
Project supports selected research activities, leveraging existing
activities and interests
PhD top-up scholarships (none awarded yet)
Research assistance
Some salary offsetting
Research exchanges with Indonesia
Topic responding to an evolving policy environment
– Prospects for engagement on mitigation now much better than at
inception of research proposal
– Large-scale research effort now underway under National Climate
Change Adaptation Research Facility (NCCARF), Griffith U
Research theme:
Economic responses to environmental change: past
Drs Pierre van der Eng and Jean-Paul Bassino
‘Lessons from the past’ that can inform cc adaptation policy?
How did people and their economies respond to large-scale env change?
Migration, structural change, what about factor prices?
What did governments do?
How did expectations match up with evolving reality?
Examples: Drying of southwest WA, rice growing in Japan/Indonesia, dust
– Asia-Pacific Economic and Business History Conference, theme “Responses
to Environmental Change”
– Workshop for researchers & policymakers at ANU, Nov 2008 (EERH funded)
– Workshop at U Montpellier, early 2009
– Session at World Economic History Congress, Utrecht 2009
Research theme:
Role of economic policy for climate change adaptation
Autonomous vs induced adaptation
Markets will drive some or much adaptation
– land prices
– insurance cost
But there are market failures
– information, myopia
– split incentives
– inability to accurately factor in risk of abrupt systemic change
And policy failures
– planning laws
– Insurance market regulation
– Drought assistance?
Where should gov’t come in, where should it stay out?
– only support better information, or try to direct economic behaviour?
Who deals best with risk and uncertainty?
Research theme:
Engaging Australia’s region
With Dr Budy Resosudarmo
Need for improved understanding of cc adaptation needs and options in
Australia’s region
– see AusAID Environment Strategy
– Pacific obvious challenges, but Indonesia: large populations vulnerable
– Indonesia: tremendous opportunities for reducing GHG emissions:
forests, coal
Building on links to Indonesian researchers and to policy community
– High-Level Policy Dialogue, Bogor/Jakarta, Dec 2007: climate policy
sessions with top officials
– UN climate conference, Bali Dec 2007: discussions with researchers and
– Project “Economic governance and public financial management in
Indonesia” with Australia-Indonesia Governance Research Programme
– Bringing researchers from the region to Australia for working visits
Research already underway by Frank Jotzo (Research
3. The international linkage of ETSs
How and to what extent should Australia link its emissions trading
system internationally?
Joint with Dr Regina Betz, UNSW/EERH
Linked in with project under the Climate Strategies network, Europe
Public events and policy dialogues
– Public forum on ETS linking: 8 expert speakers incl from Canada and
NZ, high-level government speakers
– 120+ participants from government, industry and research community
– “Emissions trading for Australia: lessons from Europe”, Dr Felix Matthes
Presentations at Bali COP 2007, Poland COP Dec 2008
Continuing toward policy papers and journal publications
– Aus-NZ linking
– Linking in a post-2012 international regime