Global Climate Change and the Funding of Adaptation

Seraina Buob and Gunter Stephan

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

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.

Keywords: Climate change; mitigation and adaptation; funding of private goods (search for similar items in EconPapers)
JEL-codes: C72 F51 Q54 (search for similar items in EconPapers)
Date: 2008-11
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ube:dpvwib:dp0804

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