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Economic Analyses
As other research furthers our understanding of the science of climate change and its impacts, economic methods provide the primary tools for linking science and public policy. Economic analyses allow California to estimate both the costs of climate change and cost implications of various policy responses. Insights into these costs will enable the state to prepare for the effects of climate change and maximize the effectiveness of scarce public resources.
Current PIEREA research in this area focuses on two areas in which the economic impacts of climate change in California will be greatest - water use and emissions trading programs. Because of climate change's effect on the frequency and magnitude of precipitation, as well as the state's infrastructure, California's water system will be the major pathway by which climate change could affect the state's economy. Meanwhile, a GHG emission reduction program will likely include some form of emissions trading system to achieve emission reduction goals more efficiently. PIEREA research is helping to estimate the water-related costs of climate change and draw from past experiences in designing an emissions trading program.
PIER-funded research in this area has been organized around one central question: what will climate change cost Californians? As the state water system and emissions trading are of primary concern, current work is in these two areas. One set of studies estimated the cost of climate change to agricultural and urban water customers. Another set reviewed the successes and shortcomings of other emissions trading programs. This body of work will better inform California's response to the challenges ahead.