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Adaptation, Mitigation and Risk-Taking in Climate Policy

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  • Heike Auerswald
  • Kai A. Konrad
  • Marcel Thum

Abstract

The future consequences of climate change are highly uncertain. Today, the exact size of possible future damages are widely unknown. Governments try to cope with these risks by investing in mitigation and adaptation measures. Mitigation aims at a reduction of greenhouse gas emissions whereas adaptation reduces the follow-up costs of climate change. In contrast to the existing literature, we explicitly model the decision of risk-averse governments on mitigation and adaptation policies. Furthermore we also consider the interaction of the two strategies. Mitigation efforts of a single country trigger crowding out as other countries will reduce their mitigation efforts. We show that, under fairly mild conditions, a unilateral increase in mitigation efforts of a single country can even increase global emissions. In contrast, a unilateral commitment to large adaptation efforts benefits the single country and may reduce the global risk from climate change at the expense of other countries.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-01/cesifo1_wp3320.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3320.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3320

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Related research

Keywords: climate change; adaptation; mitigation; risk-taking;

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References

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Citations

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Cited by:
  1. Karen Pittel & Dirk Rübbelke, 2013. "Improving Global Public Goods Supply through Conditional Transfers - The International Adaptation Transfer Riddle," CESifo Working Paper Series 4106, CESifo Group Munich.
  2. Kai A. Konrad & Marcel Thum, 2012. "The Role of Economic Policy in Climate Change Adaptation," CESifo Working Paper Series 3959, CESifo Group Munich.
  3. Benjamin Jones & Michael Keen & Jon Strand, 2013. "Fiscal implications of climate change," International Tax and Public Finance, Springer, vol. 20(1), pages 29-70, February.
  4. Bosello, Francesco & De Cian, Enrica & Ferranna, Licia, 2012. "Choosing the optimal climate change policy in the presence of catastrophic risk," EIB Working Papers 2012/03, European Investment Bank (EIB).
  5. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Ökonomische Grundfragen der Klimaanpassung: Umrisse eines neuen Forschungsprogramms," UFZ Reports 02/2012, Helmholtz Centre for Environmental Research (UFZ).
  6. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Fundamental questions on the economics of climate adaptation: Outlines of a new research programme," UFZ Reports 05/2012, Helmholtz Centre for Environmental Research (UFZ).
  7. Peters, Wolfgang & Heuson, Clemens & Schwarze, Reimund & Topp, Anna-Katharina, 2013. "Investment and adaptation as commitment devices in climate policy deteriorate mitigation," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79719, Verein für Socialpolitik / German Economic Association.
  8. Benchekroun, H. & Marrouch, W. & Ray Chaudhuri, A., 2011. "Adaptation Effectiveness and Free-Riding Incentives in International Environmental Agreements," Discussion Paper 2011-120, Tilburg University, Center for Economic Research.
  9. Heike Auerswald & Kai A. Konrad & Marcel Thum, 2011. "Unsichere Klimafolgen und rationale Klimapolitik," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(18), pages 40-43, October.

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