A more recent World Bank analysis (World Bank, 2009) concludes that the cost of developing countries to adapt to climate change between 2010 and 2050 can be estimated at US$70 billion to US$100 billion a year. These estimates must be taken with a great deal of precaution given the simplicity of the methods used, which emphasize investment costs but neglect operating costs, and because of the difficulty in accounting for the “adaptation deficit”, i.e., the inadequate adaptation to the current climate conditions (see Parry et al., 2009).

"Bottom-up" estimates are based on different methodologies depending on the sector being considered and on hypotheses that are not necessarily consistent with each other. This makes it difficult to pool their results in order to calculate the cost of adaptation at the global or national level. We can nevertheless observe that this type of analysis generally assumes adaptation costs that are less than those of estimates of top-down studies.

We can also add that **these studies provide very little information about the distribution of these costs between public budgets, producers and consumers** , whereas the effectiveness of an adaptation strategy involves not only a realistic estimate of adaptation costs but of the capacity to distribute them among the different private and public stakeholders as well.

# **2. Role and types of public actions with respect to adaptation**

This section examines the reasons that justify public intervention with respect to adaptation from a theoretical point of view (2.1), takes a look at the different types of instruments to be considered (2.2), and then gives some examples of applications for the major sectors concerned (2.3).

# **2.1. Justifying public intervention en terms of adaptation**

As mentioned above, mitigation reduces risks linked to climate change, both known and unknown, and regardless of location. In economic terms, **mitigation produces what is known as a public good**<sup>(8)</sup> . Economic theory suggests that public goods are spontaneously produced in insufficient quantity, as it is in the interest of each economic actor to take advantage of a public good produced by others without having to make the effort himself. From the point of view of economic theory, public action is therefore legitimate (and necessary) to ensure that the public good be produced at the socially optimal level.

The case of adaptation is different. Adaptation only reduces certain risk categories, most often in very specific geographic zones. In economic terms, **adaptation generally produces what is referred to as private goods.** For example, reinforcing a building so that it will be able to withstand bigger storms is only of benefit to the inhabitants of this building. In certain cases, adaptation can also produce what is known as "club" goods or services, i.e., access to a seasonal forecasting system for a fee. It can produce public goods, but ones that are most often related to a specific region or a specific sector, i.e., a seawall that indiscriminately protects all of the people who live behind it. In this last case, the issue is less one of the public/private sharing of actions than that of the distribution of responsibilities between national and local public authorities.

**Economic theory suggests that in an ideal world, private goods would be produced by the individuals or firms that benefit from them,** and not by governments.  For example, if an individual installs an air-conditioner in his home, he will take advantage of it during the next

> 8 In economic terms, a good is considered to be public if it is both non-rival (the fact that someone consumes it does not prevent others from consuming it) and non-exclusive (it is not possible to prevent someone from consuming this good).  Climate quality is typical of a public good since the fact that I can enjoy the climate does not prevent my neighbor from enjoying it as well, whereas it is impossible to prevent someone else from enjoying it.

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