A core advancement in the project will be the integration of mitigation and adaptation measures under a unifying, comprehensive and consistent umbrella pathway for Austria (embedded in the European and global context), which explores the trade-offs, and synergies as well as development potentials for climate change action. With the current global pledges for mitigation expectedly leading to the Paris goal clearly being missed with global mean temperatures rising by significantly more than 2 degrees by the end of the 21st century (compared to pre-industrial levels, UNEP, 2020; UN, 2021), global and regionally dispersed biophysical impacts will intensify and increase in frequency (IPCC, 2021) and so will socio-economic consequences without addressing and limiting damages by adaptation measures. Compared to such a world, socio-economic consequences vary with (i) either stronger mitigation efforts reducing atmospheric concentration of greenhouse gases and thus biophysical impacts, (ii) additional adaptation addressing residual damages or (iii) a combination of both, mitigation and adaptation. Because this relationship is nonlinear and complex, the project aims at connecting empirical research strands that are traditionally analysed separately and, hence, aims at identifying the quantitative dimension of their interactions and thus their relevance. By that, the approach provides a bottom-up informed analysis rather than relying on insights from highly abstract top-down integrated assessment models that originated from the work of Nordhaus (1992) which are connected to a number of theoretical and practical shortcomings (Pindyck, 2013, Pezzey, 2019).
The evaluation of integrated mitigation and adaptation pathways uses Wegener Dynamics (WEGDYN), which is a global recursive-dynamic computable general equilibrium (CGE) model (for documentation, see Bednar-Friedl et al, 2012a-b for the comparative static and Mayer et al, 2019 for the recursive-dynamic version). The public agent in the model collects taxes and spends its budget for transfers to private households and for the provision of public goods and services. Due to the multi-region multi-sector structure of the model, integrated mitigation and adaptation pathways can be analysed as local “shocks”, which spur economy-wide feedback effects and thus have implications for the public agent. A recent WEGDYN model comparison with other global CGE models of its kind applied to mitigation scenarios of global carbon pricing can be found in Böhringer et al. (2021), reporting the results of a recent Energy Modeling Forum (EMF) at Stanford University. Model applications (of the static version of WEGDYN) with a focus on public budgets are published in Bachner et al. (2019) and Bachner and Bednar-Friedl (2018). We here bring together these two strands of research, which in their combination will lead to valuable policy conclusions.
Integration of earlier separate research strands becomes increasingly relevant to address climate, environmental, social and budgetary challenges. Citing a former researcher, now head of the German environmental agency and thus in policy advice, Dirk Messner: “We observe the requirement for a transformation also of environmental economics itself, from earlier single sector policy analysis towards fostering an overall system understanding.” (Messner, 2021). The current project seeks to contribute to this transformation, focusing on climate change and public budget in integrating research strands.
In this project, for example, we expect to complement the current concept of marginal abatement costs derived as a current snapshot with a dynamic and climate-neutral transformation system-oriented concept, that also integrates aspects and risks of future stranded assets to inform current decisions. For policy involving public budget decisions we seek to explore how a comprehensive asset evaluation, particularly of public infrastructure, could advance public policy decision quality, identifying benefits of moving beyond a sole current revenue and expense accounting.
