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Investment and adaptation as commitment devices in climate politics

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  • Heuson, Clemens
  • Peters, Wolfgang
  • Schwarze, Reimund
  • Topp, Anna-Katharina

Abstract

It is well established that adaptation and technological investment in each case may serve as a commitment device in international climate politics. This paper for the first time analyzes the combined impact of these two strategic variables on global mitigation within a noncooperative framework where countries either decide on mitigation before or after adaptation. By investment, which is assumed to be made in the first place due to its considerable lead time, countries commit to lower national contributions to the global public good of mitigation. We find that the sequencing of adaptation before mitigation reinforces this strategic effect of technological investments at least for sufficiently similar countries. As a consequence, the subgame-perfect equilibrium yields a globally lower level of mitigation and higher global costs of climate change when adaptation is decided before mitigation. Besides this theoretical contribution, the paper proposes some strategies to combat the unfortunate rush to adaptation which can be currently observed in climate politics.

Suggested Citation

  • Heuson, Clemens & Peters, Wolfgang & Schwarze, Reimund & Topp, Anna-Katharina, 2013. "Investment and adaptation as commitment devices in climate politics," UFZ Discussion Papers 13/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  • Handle: RePEc:zbw:ufzdps:132013
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    1. repec:wsi:wschap:9789814641814_0009 is not listed on IDEAS
    2. Habla, Wolfgang & Roeder, Kerstin, 2017. "The political economy of mitigation and adaptation," European Economic Review, Elsevier, vol. 92(C), pages 239-257.
    3. repec:kap:enreec:v:70:y:2018:i:2:d:10.1007_s10640-017-0123-x is not listed on IDEAS
    4. Michael Finus & Bianca Rundshagen, 2015. "Game Theory and Environmental and Resource Economics–In Honour of Alfred Endres," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 657-664, December.
    5. 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

    Keywords

    adaptation; climate policy; investment; mitigation; non-cooperative behavior;

    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

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