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Adaptation to climate change can support unilateral emission reductions

Author

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  • Klaus Eisenack
  • Leonhard Kähler

Abstract

Policy advocates frequently call for unilateral action to promote international climate protection. It is still conventional wisdom that unilateral action does not pay off for individual countries due to free-riding incentives for other countries. Does this conclusion change if damage can be reduced by adaptation measures? This article considers adaptation as an explicit decision variable and frames unilateral action as Stackelberg game with two countries. The sequence of play is determined endogenously. We show that the Stackelberg leader reduces adaptation expenditures and emissions if the follower’s damage function has a specific convexity property where adaptation leads to strategic complements. Then, no country has an incentive to deviate from the sequence of play. Unilateral action in adaptation or in emissions leads to a strict Pareto improvement compared to the non-co-operative Nash solution. There are lower total emissions and less adaptation.

Suggested Citation

  • Klaus Eisenack & Leonhard Kähler, 2016. "Adaptation to climate change can support unilateral emission reductions," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 258-278.
  • Handle: RePEc:oup:oxecpp:v:68:y:2016:i:1:p:258-278.
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    File URL: http://hdl.handle.net/10.1093/oep/gpv057
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    Citations

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    Cited by:

    1. Achim Hagen & Klaus Eisenack, 2019. "Climate Clubs Versus Single Coalitions: The Ambition Of International Environmental Agreements," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-19, August.
    2. Francesco Furini & Francesco Bosello, 2021. "Accounting for adaptation and its effectiveness in International Environmental Agreements," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(2), pages 467-493, April.
    3. Bayramoglu, Basak & Finus, Michael & Jacques, Jean-François, 2018. "Climate agreements in a mitigation-adaptation game," Journal of Public Economics, Elsevier, vol. 165(C), pages 101-113.
    4. Miguel Borrero & Santiago J. Rubio, 2022. "An adaptation-mitigation game: does adaptation promote participation in international environmental agreements?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(3), pages 439-479, September.
    5. Santiago J. Rubio, 2018. "Self-Enforcing International Environmental Agreements: Adaptation and Complementarity," Working Papers 2018.29, Fondazione Eni Enrico Mattei.
    6. Finus, Michael & Furini, Francesco & Rohrer, Anna Viktoria, 2021. "The efficacy of international environmental agreements when adaptation matters: Nash-Cournot vs Stackelberg leadership," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    7. Achim Hagen & Pierre von Mouche & Hans-Peter Weikard, 2020. "The Two-Stage Game Approach to Coalition Formation: Where We Stand and Ways to Go," Games, MDPI, vol. 11(1), pages 1-31, January.
    8. Torben K. Mideksa, 2021. "Leadership and Climate Policy," CESifo Working Paper Series 9054, CESifo.
    9. Achim Hagen & Leonhard Kaehler & Klaus Eisenack, 2016. "Transnational Environmental Agreements with Heterogeneous Actors," Working Papers V-387-16, University of Oldenburg, Department of Economics, revised Jan 2016.
    10. Ralph Winkler, 2023. "On the Relationship between Adaptation and Mitigation," CESifo Working Paper Series 10371, CESifo.
    11. Jasper N. Meya & Klaus Eisenack, 2018. "Effectiveness of gaming for communicating and teaching climate change," Climatic Change, Springer, vol. 149(3), pages 319-333, August.
    12. Leonhard Kähler & Klaus Eisenack, 2016. "Strategic Complements in International Environmental Agreements: a New Island of Stability," Working Papers V-393-16, University of Oldenburg, Department of Economics, revised Aug 2016.

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