Geoscience Reference
In-Depth Information
their civilizational inheritance. There is no expected level of warming at which
we can say that so much damage has been done by climate change that there is
not much point in putting effort into stopping more.
Building blocks for adaptation
Beyond doing as much as we can on mitigation, there are two main building
blocks for a productive response to the adaptation challenge (Garnaut, 2008,
ch. 15; Garnaut 2011b, Chapter 8 ). The first is to make sure we have a strong,
flexible economy, with smoothly functioning markets. The second is to make
sure that governments, businesses and households have sound information about
possible impacts of climate change on various regions and activities. These
building blocks will assist the adaptation of future Australians up to the point
where climate change overwhelms the state.
Climate change is bound to impose shocks and hard times on Australians
and others now and in the future. Australians in future will do better if they
are working with a productive economy that is in a strong fiscal position in
preparation for a shock, and has the structural flexibility that comes from well-
regulated markets.
Adaptation to climate change will be more effective, and lower in cost, the
more individual Australians and enterprises as well as governments are involved
in working through the choices, anticipating problems before they arrive and
taking into account all of the risks in their investment decisions.
Soundly functioning markets assist households, communities and businesses
to respond effectively to the impacts of climate change. Markets provide the
most effective avenue for addressing many of the uncertainties posed by climate
change. Australia's prime asset in responding to the adaptation and mitigation
challenges that lie ahead is the prosperous, open and flexible market-oriented
economy that has emerged from reform over the last quarter century.
Some domestic and international markets for particular goods and services
will be especially important to Australia's adaptation response. These markets
may require increased policy attention to remove barriers that limit their ability
to contribute to efficient adaptation. Included in this category are markets for
insurance and finance, water and food.
However, there are limits to the extent of climate change within which each
of these markets is effective. Households and businesses are able to manage many
risks effectively through the insurance and financial markets. As the frequency
and intensity of severe weather events increase with climate change, demand
will rise for related insurance and financial services.
The recent innovation and deepening in insurance markets shows their
considerable potential to promote adaptation to climate change. By its nature,
however, conventional insurance is of limited value when an adverse event is
likely to have similar impacts over wide areas of the world. Nor is conventional
property insurance of much help when the uncertainty mainly involves the
timing rather than the extent of an impact.
 
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