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The Intricacy of Adapting to Climate Change: Flood Protection as a Local Public Goods Game

Anton Bondarev (), Beat Hintermann (), Frank Krysiak () and Ralph Winkler ()

No 6382, CESifo Working Paper Series from CESifo Group Munich

Abstract: We study adaptation to climate change in a federalist setting. To protect themselves against an increase in flood risk, regional governments choose among adaptation measures that vary with respect to their costs, the level of protection they offer, and the presence and nature of spillovers to neighboring regions. The central government can provide co-funding in response to specific proposals. If it has to deduce the vulnerability of regions by their actions, the resulting adaptation measures are too costly from a social point of view. The results show that adaptation cannot be expected to be efficient without specifically designed incentive schemes.

Keywords: climate change; adaptation; federalism; asymmetric information; vertical interaction; spillovers; non-cooperative games; signaling (search for similar items in EconPapers)
JEL-codes: C72 C73 H23 H41 H77 Q52 Q54 Q58 R53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cta, nep-env and nep-gth
Date: 2017
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