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Investment and Adaptation as Commitment Devices in Climate Politics

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  • Clemens Heuson
  • Wolfgang Peters
  • Reimund Schwarze
  • Anna-Katharina Topp

Abstract

The strategic roles of adaptation and technological investment in international climate politics have been analyzed within various approaches. What makes this paper unique is that we investigate the combined impact of adaptation and investment on global mitigation and we compare the subgame-perfect equilibria for different sequences of decisions. Considering a purely non-cooperative, game-theoretic framework, we find that by investment countries commit to lower national contributions to the global public good of mitigation. Moreover, the order of adaptation before mitigation might reinforce this strategic effect of technological investments. As a consequence, the subgame-perfect equilibrium for symmetric countries yields a globally lower level of mitigation, and higher global costs of climate change when countries engage in advanced adaptation. Besides this theoretical contribution, the paper proposes some strategies to combat the unfortunate ‘rush to adaptation’ which can be currently observed in climate politics. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Clemens Heuson & Wolfgang Peters & Reimund Schwarze & Anna-Katharina Topp, 2015. "Investment and Adaptation as Commitment Devices in Climate Politics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 769-790, December.
    • Handle: RePEc:kap:enreec:v:62:y:2015:i:4:p:769-790
    DOI: 10.1007/s10640-015-9887-z
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    Cited by:

    1. Wolfgang Peters & Reimund Schwarze & Anna-Katharina Topp, 2017. "Pareto Improvements Induced by Climate Funding in a Strategic Adaptation-Mitigation Framework," World Scientific Book Chapters, in: Anil Markandya & Ibon Galarraga & Dirk Rübbelke (ed.), Climate Finance Theory and Practice, chapter 9, pages 191-212, World Scientific Publishing Co. Pte. Ltd..
    2. Habla, Wolfgang & Roeder, Kerstin, 2017. "The political economy of mitigation and adaptation," European Economic Review, Elsevier, vol. 92(C), pages 239-257.
    3. Andrew Kliskey & Paula Williams & John T. Abatzoglou & Lilian Alessa & Richard B. Lammers, 2019. "Enhancing a community-based water resource tool for assessing environmental change: the arctic water resources vulnerability index revisited," Environment Systems and Decisions, Springer, vol. 39(2), pages 183-197, June.
    4. Santiago J. Rubio, 2018. "Self-Enforcing International Environmental Agreements: Adaptation and Complementarity," Working Papers 2018.29, Fondazione Eni Enrico Mattei.
    5. Christian Feige & Karl-Martin Ehrhart & Jan Krämer, 2018. "Climate Negotiations in the Lab: A Threshold Public Goods Game with Heterogeneous Contributions Costs and Non-binding Voting," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(2), pages 343-362, June.
    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. Michèle Breton & Lucia Sbragia, 2019. "The Impact of Adaptation on the Stability of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 697-725, October.
    8. Michael Finus & Bianca Rundshagen, 2015. "Game Theory and Environmental and Resource Economics–In Honour of Alfred Endres," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 657-664, December.
    9. Heike Auerswald & Kai A. Konrad & Marcel Thum, 2018. "Adaptation, mitigation and risk-taking in climate policy," Journal of Economics, Springer, vol. 124(3), pages 269-287, July.

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    More about this item

    Keywords

    Adaptation; Climate policy; Investment; Mitigation; Non-cooperative behavior; Q54; H41; H87; C72;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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