Wd. Shaw, PROBLEMS WITH ESTIMATING THE ECONOMIC-IMPACTS OF AVERTING CLIMATE-CHANGE - A LOOK AT WATER-RESOURCES, Water resources research, 32(7), 1996, pp. 2251-2257
Averting climate change may have substantial water-resource-related be
nefits to agricultural, industrial, recreational, and residential hous
ehold users. Economic benefits are usually estimated assuming that ind
ividuals face no uncertainty in decision making, but the benefits from
averting climate change will accrue primarily to individuals in the f
uture. Predicting future; benefits is usually done using ex ante econo
mic methods, and propogating uncertainty or specifiying the appropriat
e distributions in estimating the magnitude of the benefits is a probl
em. After describing the key issues relating climate change and water
resources, the paper explains why economic theory fails to demonstrate
which method appears more reasonable than the other. Alternatively, w
e might attempt to estimate the benefits from averting climate change
using a benefits analysis of similar events that have already occurred
. Many suggestions for conducting a benefits transfer, including one i
n the area of water-based recreation, are offered as ways to glean som
ething about possible water-resource-related benefits from averting cl
imate change.