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The Intricacy of Adapting to Climate Change: Flood Protection as a Local Public Goods Game

Author

Listed:
  • Anton Bondarev
  • Beat Hintermann
  • Frank C. Krysiak
  • Ralph Winkler

Abstract

We study adaptation to climate change in a federalist setting. To protect themselves against an increase in flood risk, regional governments choose among adaptation measures that vary with respect to their costs, the level of protection they offer, and the presence and nature of spillovers to neighboring regions. The central government can provide co-funding in response to specific proposals. If it has to deduce the vulnerability of regions by their actions, the resulting adaptation measures are too costly from a social point of view. The results show that adaptation cannot be expected to be efficient without specifically designed incentive schemes.

Suggested Citation

  • Anton Bondarev & Beat Hintermann & Frank C. Krysiak & Ralph Winkler, 2017. "The Intricacy of Adapting to Climate Change: Flood Protection as a Local Public Goods Game," CESifo Working Paper Series 6382, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6382
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    More about this item

    Keywords

    climate change; adaptation; federalism; asymmetric information; vertical interaction; spillovers; non-cooperative games; signaling;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • 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
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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