Adaptive capacity deficits and adaptive capacity of economic systems in climate change vulnerability assessment

This paper considers two ways that economic concepts inform adaptive capacity assessments within the context of climate change vulnerability analysis. First, using an economics framework, there are rational and logical reasons why different individuals and different organized human systems have different levels of adaptive capacity and these differences do not necessarily correlate to differences in vulnerability. An alternative approach is to determine where there are factors leading to socially inequitable or economically sub‐optimal investment in adaptive capacity assets or reduced effectiveness of adaptive capacity assets resulting in adaptive capacity deficits. Factors contributing to adaptive capacity deficits include cases of irrational agent behaviour and cases where there are political, social, and economic system failures. A second way current adaptive capacity constructs can be enhanced is by taking explicit account of the adaptive capacity of economic systems. Economic system properties such as scale, diversity, relative mix of the private and public sectors, innovation, organizational/managerial capital, substitutability of inputs, factor mobility, liquidity of assets, etc. will affect the capacity of economic systems to adapt.