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Adaptation, Mitigation and Risk-Taking in Climate Policy


  • Heike Auerswald
  • Kai A. Konrad
  • Marcel Thum


The future consequences of climate change are highly uncertain. Today, the exact size of possible future damages are widely unknown. Governments try to cope with these risks by investing in mitigation and adaptation measures. Mitigation aims at a reduction of greenhouse gas emissions whereas adaptation reduces the follow-up costs of climate change. In contrast to the existing literature, we explicitly model the decision of risk-averse governments on mitigation and adaptation policies. Furthermore we also consider the interaction of the two strategies. Mitigation efforts of a single country trigger crowding out as other countries will reduce their mitigation efforts. We show that, under fairly mild conditions, a unilateral increase in mitigation efforts of a single country can even increase global emissions. In contrast, a unilateral commitment to large adaptation efforts benefits the single country and may reduce the global risk from climate change at the expense of other countries.

Suggested Citation

  • Heike Auerswald & Kai A. Konrad & Marcel Thum, 2011. "Adaptation, Mitigation and Risk-Taking in Climate Policy," CESifo Working Paper Series 3320, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3320

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    Cited by:

    1. 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.
    2. Kai A. Konrad & Marcel Thum, 2012. "The Role of Economic Policy in Climate Change Adaptation," CESifo Working Paper Series 3959, CESifo Group Munich.
    3. repec:wsi:ccexxx:v:04:y:2013:i:02:n:s201000781350005x is not listed on IDEAS
    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.
    5. Walid Marrouch & Amrita Ray Chaudhuri, 2011. "International Environmental Agreements in the Presence of Adaptation," CIRANO Working Papers 2011s-32, CIRANO.
    6. repec:wsi:wschap:9789814641814_0009 is not listed on IDEAS
    7. 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.
    8. Habla, Wolfgang & Roeder, Kerstin, 2017. "The political economy of mitigation and adaptation," European Economic Review, Elsevier, vol. 92(C), pages 239-257.
    9. Benjamin Jones & Michael Keen & Jon Strand, 2013. "Fiscal implications of climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 29-70, February.
    10. Heike Auerswald & Kai A. Konrad & Marcel Thum, 2011. "Unsichere Klimafolgen und rationale Klimapolitik," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(18), pages 40-43, October.
    11. Bosello, Francesco & De Cian, Enrica & Ferranna, Licia, 2012. "Choosing the optimal climate change policy in the presence of catastrophic risk," EIB Working Papers 2012/03, European Investment Bank (EIB).
    12. David Onyinyechi Agu & Evelyn Nwamaka & Ogbeide Osaretin, 2016. "An inquiry into the political economy of the global clean energy transition policies and Nigeria's federal and state governments' fiscal policies," WIDER Working Paper Series 031, World Institute for Development Economic Research (UNU-WIDER).
    13. Claudia Schwirplies, 2015. "Adaptation vs. climate protection: Responses to climate change and policy preferences of individuals in China, Germany, and the USA," MAGKS Papers on Economics 201502, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    14. Benchekroun, H. & Marrouch, W. & Ray Chaudhuri, A., 2011. "Adaptation Effectiveness and Free-Riding Incentives in International Environmental Agreements," Discussion Paper 2011-120, Tilburg University, Center for Economic Research.
    15. repec:kap:empiri:v:44:y:2017:i:4:d:10.1007_s10663-017-9381-7 is not listed on IDEAS
    16. Maddalena Ferranna, 2017. "Does Inefficient Risk Sharing Increase Public Self-Protection?," The Geneva Papers on Risk and Insurance Theory, Springer;International Association for the Study of Insurance Economics (The Geneva Association), vol. 42(1), pages 59-85, March.
    17. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Fundamental questions on the economics of climate adaptation: Outlines of a new research programme," UFZ Reports 05/2012, Helmholtz Centre for Environmental Research (UFZ).
    18. repec:kap:enreec:v:67:y:2017:i:3:d:10.1007_s10640-016-9997-2 is not listed on IDEAS
    19. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Ökonomische Grundfragen der Klimaanpassung: Umrisse eines neuen Forschungsprogramms," UFZ Reports 02/2012, Helmholtz Centre for Environmental Research (UFZ).
    20. 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: Climate Finance Theory and Practice, chapter 9, pages 191-212 World Scientific Publishing Co. Pte. Ltd..

    More about this item


    climate change; adaptation; mitigation; risk-taking;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy


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