Citation:

Sussman, F., A. Grambsch, J. Li, AND C. Weaver. Introduction to a special issue entitled Perspectives on Implementing Benefit-Cost Analysis in Climate Assessment. Journal of Benefit-Cost Analysis. Cambridge University Press, Cambridge, Uk, 5(3):333-346, (2015). https://doi.org/10.1515/jbca-2014-9000

Impact/Purpose:

The topics covered in this Special Issue are of current relevance and will continue to be important for a number of years. As climate impact assessment moves forward, economic analysis in all its forms, including BCA, is likely to play a growing role in decision making, particularly at the level of adaptation plans and strategies. This collection of papers highlights significant challenges in producing analytically sound, helpful economic information on climate change. Nonetheless, opportunities exist for economists, working in new ways (e.g., in multidisciplinary teams, applying new frameworks, engaging stakeholders), to make substantial contributions to understanding and decision making.

Description:

Over the past half-century or more, economists have developed a robust literature on the theory and practice of benefit-cost analysis (BCA) as applied to diverse projects and policies. Recent years have seen a growing demand for practical applications of BCA to climate change policy questions. As economists seek to meet this demand, they face challenges that arise from the nature of climate change impacts, such as the long time frame and the potential for non-marginal changes, the importance of intangible effects, and the need to grapple with Knightian uncertainty. As a result of these and other characteristics of climate change, many of the fundamental tenets of BCA are coming under scrutiny and the limits of BCA’s methodological and practical boundaries are being tested. This special issue assembles a set of papers that review the growing body of literature on the economics of climate change. The papers describe the state of the literature valuing climate change impacts, both globally and at more disaggregated levels. The papers also discuss the challenges economists face in applying BCA to support climate change decision making and adaptation planning. This introduction provides background and context on the current use of BCA in climate change analysis, and sets each paper firmly in that context, identifying also areas for future research. While the challenges in conducting BCA and interpreting its results are significant, across the papers it becomes clear that economic analysis in general, and the tools and methods of BCA in particular, have a central role to play in supporting decision-making about how to respond to climate change.

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