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Investment and Adaptation as Commitment Devices in Climate Politics

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  • Clemens Heuson
  • Wolfgang Peters

    ()
    (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))

  • Reimund Schwarze
  • Anna-Katharina Topp

    ()
    (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))

Abstract

It is well established that adaptation and technological investment in each case may serve as a commitment device in international climate politics. This paper for the first time analyzes the combined impact of these two strategic variables on global mitigation within a non-cooperative framework where countries either decide on mitigation before or after adaptation. By investment, which is assumed to be made in the fi rst place due to its considerable lead time, countries commit to lower national contributions to the global public good of mitigation. We fi nd that the sequencing of adaptation before mitigation reinforces this strategic effect of technological investments at least for sufficiently similar countries. As a consequence, the subgame-perfect equi- librium yields a globally lower level of mitigation, and higher global costs of climate change when adaptation is decided before mitigation. Besides this theoretical contribution, the paper proposes some strategies to combat the unfortunate ’rush to adaptation’ which can be currently observed in climate politics.

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Bibliographic Info

Paper provided by RECAP15, European University Viadrina, Frankfurt (Oder) in its series Discussion Paper Series RECAP15 with number 011.

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Length: 24 pages
Date of creation: Oct 2013
Date of revision:
Handle: RePEc:euv:dpaper:011

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Keywords: adaptation; climate policy; investment; mitigation; non-cooperative behavior;

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  1. Lecocq, Franck & Shalizi, Zmarak, 2007. "Balancing expenditures on mitigation of and adaptation to climate change : an exploration of Issues relevant to developing countries," Policy Research Working Paper Series 4299, The World Bank.
  2. Aggarwal, Rimjhim M. & Narayan, Tulika A., 2004. "Does inequality lead to greater efficiency in the use of local commons? The role of strategic investments in capacity," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 163-182, January.
  3. Ficre Zehaie, 2009. "The Timing and Strategic Role of Self-Protection," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 44(3), pages 337-350, November.
  4. 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.
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