Climate change, mitigation and adaptation: the case of the Murray–Darling Basin in Australia

5. Concluding comments

First, the effects of, and the nature of adaptation to, climate change cannot be
modelled accurately without taking appropriate account of uncertainty. The
analysis presented here shows that an increase in the frequency of droughts will
result in economic losses and environmental damage substantially greater than
would be expected from a similar reduction in average inflows modelled in a non-
stochastic framework. Moreover, whereas a non-stochastic analysis implies that
an increase in the scarcity of water should imply an increased allocation to high-
value horticultural crops, a stochastic analysis yields the opposite result.

Second, the modelling presented here illustrates the complexity of the
relationship between adaptation and mitigation. For low and moderate rates of
climate change, adaptation and mitigation are substitutes, with adapation likely
to be a lower cost alternative if the rate of change of climatic conditions is low.
However, given the severe reductions in inflows expected in the absence of
mitigation, there are no feasible adaptation options in many catchments other
than the abandonment of irrigated agriculture. In general the higher the rate of
climate change in the absence of mitigation, the more likely it is that adaptation
and mitigation are complements rather than substitutes.

Third, even with strong mitigation, maintenance of existing allocations of water
to irrigated agriculture implies a reduction in environmental flows, from levels
that are already considered unsustainably low. The analysis presented above
shows that, given stabilization of atmospheric concentrations of CO2 at 450 ppm,
environmental flows could be maintained or increased at relatively modest
economic cost.

The simulations reported here are based on the assumption of constant relative
prices. A more complete treatment would require a general equilibrium analysis

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