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Adaptation and Mitigation in Global Pollution Problems: Economic Impacts of Productivity, Sensitivity and Adaptive Capacity

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  • Udo Ebert

    (University of Oldenburg, Department of Economics)

  • Heinz Welsch

    ()
    (University of Oldenburg, Department of Economics)

Abstract

This paper studies the influence of productivity, pollution sensitivity, and adaptive capacity on optimal mitigation and adaptation in a two country global pollution model. We investigate the effects of changes of these parameters on the allocation of emissions, adaptation expenditures, and welfare. In our analysis we distinguish between cooperative and noncooperative behavior. Our findings imply that unilateral improvements in productivity and adaptive capacity have strategic significance and do not necessarily lead to mutual welfare improvements. They raise the emissions not only in the country where the technological improvement takes place, but also globally. An improvement in global welfare is guaranteed only under cooperative behavior with respect to emission and adaptation choices.

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File URL: http://www.vwl.uni-oldenburg.de/download/V-332-11.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by University of Oldenburg, Department of Economics in its series Working Papers with number V-332-11.

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Length: 27 pages
Date of creation: Feb 2011
Date of revision: Feb 2011
Publication status: Published in Oldenburg Working Papers V-332-11
Handle: RePEc:old:dpaper:332

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Keywords: Global pollution; adaptation; mitigation; cooperative behavior; Nash equilibrium; comparative statics;

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References

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  1. Udo Ebert & Heinz Welsch, 2011. "Optimal response functions in global pollution problems can be upward-sloping: accounting for adaptation," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(2), pages 129-138, June.
  2. Corrado Di Maria & Edwin van der Werf, 2006. "Carbon Leakage Revisited: Unilateral Climate Policy with Directed Technical Change," Working Papers 2006.94, Fondazione Eni Enrico Mattei.
  3. Welsch Heinz, 1993. "An Equilibrium Framework for Global Pollution Problems," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages S64-S79, July.
  4. Felder Stefan & Rutherford Thomas F., 1993. "Unilateral CO2 Reductions and Carbon Leakage: The Consequences of International Trade in Oil and Basic Materials," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 162-176, September.
  5. Copeland,B.R. & Taylor,M.S., 2000. "Free trade and global warming : a trade theory view of the Kyoto protocol," Working papers 4, Wisconsin Madison - Social Systems.
  6. TULKENS, Henri & VAN STEENBERGHE, Vincent, 2009. "“Mitigation, adaptation, suffering” : In search of the right mix in the face of climate change," CORE Discussion Papers 2009054, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Ficre Zehaie, 2009. "The Timing and Strategic Role of Self-Protection," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 44(3), pages 337-350, November.
  8. Tol, Richard S. J., 2008. "The Social Cost of Carbon: Trends, Outliers and Catastrophes," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 2(25), pages 1-22.
  9. Ingham, Alan & Ma, Jie & Ulph, Alistair, 2007. "Climate change, mitigation and adaptation with uncertainty and learning," Energy Policy, Elsevier, vol. 35(11), pages 5354-5369, November.
  10. Michael Finus & Stefan Maus, 2008. "Modesty May Pay!," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 801-826, October.
  11. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
  12. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
  13. Shibata, Hirofumi & Winrich, J Steven, 1983. "Control of Pollution when the Offended Defend Themselves," Economica, London School of Economics and Political Science, vol. 50(200), pages 425-37, November.
  14. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
  15. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
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Citations

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Cited by:
  1. Klaus Eisenack, 2014. "The Inefficiency of Private Adaptation to Pollution in the Presence of Endogenous Market Structure," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 57(1), pages 81-99, January.
  2. Oliver Schenker & Gunter Stephan, 2012. "International Trade and the Adaptation to Climate Change and Variability," Diskussionsschriften dp1201, Universitaet Bern, Departement Volkswirtschaft.
  3. Heuson, Clemens, 2013. "Self-protection as a limit to strategic delegation in the context of global pollution problems," UFZ Discussion Papers 18/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  4. repec:old:wpaper:344 is not listed on IDEAS
  5. 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.
  6. Johan Eyckmans & Sam Fankhauser & Snorre Kverndokk, 2013. "Equity, Development Aid and Climate Finance," Grantham Research Institute on Climate Change and the Environment Working Papers 123, Grantham Research Institute on Climate Change and the Environment.
  7. Klaus Eisenack & Leonhard Kähler, 2012. "Unilateral emission reductions can lead to Pareto improvements when adaptation to damages is possible," Working Papers V-344-12, University of Oldenburg, Department of Economics, revised Jan 2012.
  8. 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.

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