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Global Climate Change and the Funding of Adaptation

Author

Listed:
  • Seraina Buob
  • Gunter Stephan

Abstract

Mitigation and adaptation are the most important strategies in combating global climate change. It is expected that in a post Kyoto world industrialized countries have to engage in greenhouse gas abatement, and to support developing countries in adapting to climate change. Within the framework of a non-cooperative Nash game we analyze, whether funding adaptation is incentive compatible in the sense that it stipulates mitigation. In particular it is the aim of this paper to discuss: (1) How does foreign funding of adaptation affect mitigation and regional welfare? (2) Under which conditions is it economically rational to fund adaptation in developing regions? We find that, if strict complementarity between adaptation and mitigation exists, funding adaptation increases both global mitigation and the donors' welfare, but negatively affects the recipients' welfare. The later only benefit, if maladaptation or adaptation, which is neutral to mitigation, is funded, which, however, makes the donors worse off.

Suggested Citation

  • Seraina Buob & Gunter Stephan, 2008. "Global Climate Change and the Funding of Adaptation," Diskussionsschriften dp0804, Universitaet Bern, Departement Volkswirtschaft.
  • Handle: RePEc:ube:dpvwib:dp0804
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    References listed on IDEAS

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    1. W. Neil Adger & Saleemul Huq & Katrina Brown & Declan Conway & Mike Hulme, 2003. "Adaptation to climate change in the developing world," Progress in Development Studies, , vol. 3(3), pages 179-195, July.
    2. Scott Barrett & Robert Stavins, 2003. "Increasing Participation and Compliance in International Climate Change Agreements," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 3(4), pages 349-376, December.
    3. Barry Smit & Ian Burton & Richard Klein & J. Wandel, 2000. "An Anatomy of Adaptation to Climate Change and Variability," Climatic Change, Springer, vol. 45(1), pages 223-251, April.
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    Cited by:

    1. Lazkano, Itziar & Marrouch, Walid & Nkuiya, Bruno, 2016. "Adaptation to climate change: how does heterogeneity in adaptation costs affect climate coalitions?," Environment and Development Economics, Cambridge University Press, vol. 21(06), pages 812-838, December.

    More about this item

    Keywords

    Climate change; mitigation and adaptation; funding of private goods;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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