Adaptation in first- and second-best worlds

Mitigation policies have traditionally been evaluated from the perspective of first-best worlds that have perfect foresight and full and immediate policy implementation. Adaptation assessments typically consider second-best worlds that incorporate the realities of market imperfections, institutional and informational constraints, delayed policy implementation, and other issues. As mitigation analyses increasingly consider the potential effectiveness of policies implemented under second-best world assumptions, it strikes us that their use of first-best and second-best benchmarks is becoming increasingly valuable. It also strikes us that adding the perspective of first-best worlds to adaptation analyses would do the same by providing comparable baselines for national and international assessments integrating the costs and benefits of adaptation and mitigation policies. In addition, adaptation analyses under first-best world assumptions could provide valuable information to policymakers on what could be achieved under ideal conditions. It would be very informative for science and policy to understand the benefits, trade-offs, human and financial resource requirements, and residual damages under first-best and second-best assumptions about the rate, extent, and timing of implementation of climate policies.