Climate change is no longer viewed solely as a future environmental threat. Rising temperatures, more frequent heatwaves, floods, severe storms and sea-level rise are already affecting household livelihoods, business operations, supply chains and government finances around the world. As these impacts become more widespread, economists are increasingly examining how societies can adapt while maintaining economic stability and reducing long-term risks. A new review published in the Journal of Management Science and Engineering explores the growing role of economics in understanding and guiding climate adaptation.

The review, conducted by Xi Ming and Hongbo Duan from the School of Economics & Management at the University of Chinese Academy of Sciences, analysed 6,248 publications published between 1978 and 2025. Combining bibliometric mapping with an extensive review of empirical studies, theoretical frameworks and analytical methods, the researchers trace the evolution of climate adaptation economics from a relatively narrow focus on agriculture and natural disasters to a comprehensive field encompassing households, businesses, markets, international cooperation and social welfare. They also identify several priorities for future research, including the development of high-resolution adaptation databases, stronger causal evidence, improved models for deep uncertainty and climate damages, and greater attention to political economy, equity and cross-regional interactions.

The review shows that adaptation occurs across every level of society. Households respond to changing climate conditions by modifying consumption patterns, increasing the use of cooling technologies, adopting new farming practices or relocating to less vulnerable areas. Businesses, meanwhile, adapt by modernising production processes, diversifying supply chains, relocating operations, investing in new technologies and improving resilience against climate-related disruptions. These responses can reduce immediate economic losses while helping organisations remain competitive under increasingly volatile environmental conditions.

The authors emphasise, however, that the capacity to adapt is far from equal. Lower-income households, farmers in climate-sensitive regions and small and medium-sized enterprises often face significant financial, informational and institutional barriers that limit their ability to respond effectively. These disparities can widen existing economic inequalities if adaptation policies fail to account for differences in resources and access to support. The review argues that successful adaptation strategies must therefore strengthen resilience among the most vulnerable groups while ensuring that economic opportunities remain broadly accessible.

At the broader economic level, the researchers stress that adaptation should not be viewed as a replacement for climate mitigation. Adaptation helps reduce the damage caused by climate impacts that are already unavoidable, but relying too heavily on adaptation could weaken incentives to reduce greenhouse gas emissions and leave societies exposed to long-term climate risks. Conversely, mitigation alone cannot shield communities from the immediate effects of climate change that are already unfolding. According to the review, policies such as adaptation assistance, trade adjustments, migration, capital reallocation and industrial restructuring can reduce overall welfare losses. However, they may also create new economic and social tensions across regions, industries and population groups.

Ultimately, the authors conclude that climate adaptation extends well beyond protecting communities from extreme weather. It requires designing economic systems that enable households, businesses and entire regions to adjust effectively to a changing climate without worsening social inequality. By integrating stronger data, more rigorous evidence and a deeper understanding of uncertainty and distributional impacts, future research can help policymakers develop adaptation strategies that are both economically efficient and socially equitable, supporting resilience while complementing continued efforts to reduce global emissions.

More information: Xi Ming et al, Climate adaptation economics: Bibliometrics, methods, and mechanisms, Journal of Management Science and Engineering. DOI: 10.1016/j.jmse.2026.03.001

Journal information: Journal of Management Science and Engineering Provided by KeAi Communications Co., Ltd.