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Adaptation to climate change can support unilateral emission reductions

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  • Klaus Eisenack
  • Leonhard Kähler

Abstract

Policy advocates frequently call for unilateral action to promote international climate protection. It is still conventional wisdom that unilateral action does not pay off for individual countries due to free-riding incentives for other countries. Does this conclusion change if damage can be reduced by adaptation measures? This article considers adaptation as an explicit decision variable and frames unilateral action as Stackelberg game with two countries. The sequence of play is determined endogenously. We show that the Stackelberg leader reduces adaptation expenditures and emissions if the follower’s damage function has a specific convexity property where adaptation leads to strategic complements. Then, no country has an incentive to deviate from the sequence of play. Unilateral action in adaptation or in emissions leads to a strict Pareto improvement compared to the non-co-operative Nash solution. There are lower total emissions and less adaptation.

Suggested Citation

  • Klaus Eisenack & Leonhard Kähler, 2016. "Adaptation to climate change can support unilateral emission reductions," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 258-278.
  • Handle: RePEc:oup:oxecpp:v:68:y:2016:i:1:p:258-278.
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    File URL: http://hdl.handle.net/10.1093/oep/gpv057
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    Cited by:

    1. Rubio, Santiago J., 2018. "Self-Enforcing International Environmental Agreements: Adaptation and Complementarity," ET: Economic Theory 276179, Fondazione Eni Enrico Mattei (FEEM).
    2. Bayramoglu, Basak & Finus, Michael & Jacques, Jean-François, 2018. "Climate agreements in a mitigation-adaptation game," Journal of Public Economics, Elsevier, vol. 165(C), pages 101-113.
    3. Achim Hagen & Leonhard Kaehler & Klaus Eisenack, 2016. "Transnational Environmental Agreements with Heterogeneous Actors," Working Papers V-387-16, University of Oldenburg, Department of Economics, revised Jan 2016.
    4. repec:spr:climat:v:149:y:2018:i:3:d:10.1007_s10584-018-2254-7 is not listed on IDEAS
    5. Leonhard Kähler & Klaus Eisenack, 2016. "Strategic Complements in International Environmental Agreements: a New Island of Stability," Working Papers V-393-16, University of Oldenburg, Department of Economics, revised Aug 2016.

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