Abstract
The objective of this research is to evaluate investment as a robust adaptation strategy in response to projected climate change in China. Four scenarios combining climate change and investment have been simulated in the model which is established adopting the standard approach of modern optimal economic growth theory and includes two discount factors from the climate sector, i. e., flood damage from climate variability and climate change. Relationships between flood sectors are established from historical data and applied to estimate the benefit of investment to mitigate flood damage from climate variability. By assuming that the marginal adaptation costs to flood damage from projected climate change is the same as those from current climate variability, these relationships are also applied to estimate the benefit of investment in mitigating flood damage from climate change. The conclusion is that optimized investment, taking into climate change consideration will effectively reduce the damage from climate change and promote the capacity to mitigate flood damage from climate variability and that consumption and production increase no matter whether climate change occurs or not.
