Climate Policy Must Favour Mitigation Over Adaptation

In climate change policy, adaptation tends to be viewed as being as important as mitigation. In this article we present a simple yet gen- eral argument for which mitigation must be preferred to adaptation. The argument rests on the observation that mitigation is a public good while adaptation is a private one. This implies that the more one disag- gregates the units in a social welfare function, i.e. the more one teases out the public good nature of mitigation, the lower is average income and thus less money (per region, country or individual) is available for adaptation and mitigation. We show that, while this reduces incen- tives to invest in the private good adaptation, it increases incentives to invest in the public good mitigation since even small contributions of everyone can have signi cant impacts at the large. Conclusively, private adaptation thus must be viewed as a signi cant loss to global welfare. When taking this result to the data we nd that a representa- tive policy maker who relies on world-aggregated data would invest in both adaptation and mitigation, just as the previous literature recom- mends. However, a representative policy maker who relies on country- level data, or data at further levels of disaggregation, would optimally only invest in mitigation.