Climate Change: Where should the money go?

When the world’s policy makers sit down to discuss what should be done about climate change, two words invariably get thrown around: mitigation and adaptation.

But Alain-Désiré Nimubona, an assistant professor in Waterloo’s Department of Economics and Horatiu Rus, an assistant professor in the Departments of Economics and Political Science, believe a couple of other words should be added to the list: international trade.

“We say that international trade will be the tool that we’ll be using to determine if an economy should be investing in adaptation, mitigation or both,” says Nimubona.

No one answer

Mitigation addresses the root cause of climate change by eliminating greenhouse gas emissions in the first place. Citizens are encouraged to walk rather than drive, for example, or companies are given tax breaks for producing green energy.

Adaptation, however, is about finding ways to deal with climate change consequences, whether that’s moving homes away from coastal regions hit by flooding, or focusing a country’s resources on manufacturing instead of agriculture.

Both approaches are needed, says Nimubona and Rus, who are working on a project funded by the Social Sciences and Humanities Research Council of Canada (SSHRC.)

Open for trade

International connections are vital when deciding where a country should spend its money. A country that is closed to trade could find itself vulnerable as it spends the majority of its resources producing what its own citizens need to survive rather than addressing its growing climate change concerns, says Nimubona.

But a country open to trade?  It could conceivably find itself spending less on adapting to its changing environment. For instance, rather than focusing on forestry or fishing – two sectors that would be hard hit by a warming climate – it could bolster its tourist sector and import goods from other countries now in a better position to provide them.

While the SSHRC project is still ongoing, the results could ultimately have a real impact on how governments create climate change policy and international treaties. Their data will be vital when projecting what countries will need to do to protect their people and livelihood, five, 10 or even 20 years from now.

“It’s a very complex question to answer. You have to make sure that the different countries are making the right decisions. That’s what we’re trying to help them do,” says Nimubona.