Global Climate Change and the Funding of Adaptation
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.
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- 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.
- Scott Barrett & Robert Stavins, 2003.
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International Environmental Agreements: Politics, Law and Economics,
Springer, vol. 3(4), pages 349-376, December.
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- Michael Toman, 1998.
"Research Frontiers in the Economics of Climate Change,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 11(3), pages 603-621, April.
- Toman, Michael, 1998. "Research Frontiers in the Economics of Climate Change," Discussion Papers dp-98-32, Resources For the Future.
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