Adapting to Climate Change: Equilibrium Welfare Implications for Large and Small Economies

Martin Farnham and Peter Kennedy

Environmental & Resource Economics, 2015, vol. 61, issue 3, 345-363

Abstract: We show that the availability of adaptation can be welfare-reducing in the non-cooperative equilibrium in a setting with multiple countries. Adaptation is a private good while abatement is a public good. This means that substitution out of abatement and into adaptation by any one country imposes a negative externality on all other countries. The potentially deleterious impact of adaptation is asymmetric: small economies are most likely to be hurt by the availability of adaptation because they control a small fraction of global emissions relative to the biggest emitters. Copyright Springer Science+Business Media Dordrecht 2015

Keywords: Climate change; Adaptation; Heterogeneous countries (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s10640-014-9795-7

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