IDEAS home Printed from https://ideas.repec.org/p/euv/dpaper/22.html
   My bibliography  Save this paper

Pareto improvements induced by climate funding in a strategic adaptation-mitigation framework

Author

Listed:
  • Wolfgang Peters

    () (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))

  • Reimund Schwarze

    (Europa University Viadrina and Helmholtz Centre for Environmental Research (UFZ))

  • Anna-Katharina Topp

    () (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))

Abstract

We address the international regime of climate finance, which is emerging in the post-Kyoto architecture, and investigate which type of earmarked funding may lead to Pareto improvements for donor and recipient countries. As funding within the post-Kyoto framework is voluntary, sustained finance in the long term can only be guaranteed if all participating countries benefit. In order to rule out for the Bergstrom paradox, which states that recipient countries may end up in a worse-off situation as a consequence of conditional transfers, we presume a framework in which donor countries commit themselves not to reduce their own mitigation efforts. Regarding three types of earmarked climate funding, which compensate either mitigation, adaptation or damage costs, we find that only funds that are directed at mitigation activities boost the global level of mitigation and may induce Pareto improvements. Transferring our results into the political context of the Green Climate Fund, we recommend to prioritize finance of 'energy generation and access', which aims at enhancing mitigation through low-emission power generation and access.

Suggested Citation

  • Wolfgang Peters & Reimund Schwarze & Anna-Katharina Topp, 2015. "Pareto improvements induced by climate funding in a strategic adaptation-mitigation framework," Discussion Paper Series RECAP15 22, RECAP15, European University Viadrina, Frankfurt (Oder).
  • Handle: RePEc:euv:dpaper:22
    as

    Download full text from publisher

    File URL: https://www.europa-uni.de/de/forschung/institut/recap15/downloads/recap15_DP022.pdf
    File Function: First version, 2015
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. repec:zbw:hohpro:344 is not listed on IDEAS
    4. Karen Pittel & Dirk Rübbelke, 2013. "International Climate Finance and Its Influence on Fairness and Policy," The World Economy, Wiley Blackwell, vol. 36(4), pages 419-436, April.
    5. Udo Ebert & Heinz Welsch, 2012. "Adaptation and Mitigation in Global Pollution Problems: Economic Impacts of Productivity, Sensitivity, and Adaptive Capacity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(1), pages 49-64, May.
    6. Ficre Zehaie, 2009. "The Timing and Strategic Role of Self-Protection," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(3), pages 337-350, November.
    7. 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.
    8. Buchholz, Wolfgang & Cornes, Richard & Peters, Wolfgang & Rübbelke, Dirk, 2015. "Pareto improvement through unilateral matching of public good contributions: The role of commitment," Economics Letters, Elsevier, vol. 132(C), pages 9-12.
    9. repec:wsi:ccexxx:v:06:y:2015:i:03:n:s201000781550013x is not listed on IDEAS
    10. Sally Kane & Jason Shogren, 2000. "Linking Adaptation and Mitigation in Climate Change Policy," Climatic Change, Springer, vol. 45(1), pages 75-102, April.
    11. Scott Barrett, 2008. "Climate treaties and the imperative of enforcement," Oxford Review of Economic Policy, Oxford University Press, vol. 24(2), pages 239-258, Summer.
    12. Buob, Seraina & Stephan, Gunter, 2011. "To mitigate or to adapt: How to confront global climate change," European Journal of Political Economy, Elsevier, vol. 27(1), pages 1-16, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    adaptation; climate change; funding; mitigation; Nash bargaining;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:euv:dpaper:22. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daniel Becker). General contact details of provider: http://edirc.repec.org/data/fwffode.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.