Optimal Adaptation and Mitigation to Climate Change in Small Environmental Economies

Sebastian Miller, Sebastian Galiani and Omar Chisari

No 4668, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper compares the optimal dynamic choices between policies of mitigation and adaptation for three economies: Brazil, Chile and the United States. The focus is on the optimal role of mitigation and adaptation for "environmentally small economies", i. e. , economies that are witnessing an exogenous increase in emissions to which they are contributing very little. The simulations lead to three main conclusions. First, small economies should concentrate their environmental efforts, if any, on adaptation. This is not a recommendation that such economies indulge in free-riding. Instead, it is based on considerations of cost effectiveness, ceteris paribus. Second, small economies that are unable to spend enough on adaptation may end up spending less on mitigation owing to their impoverishment as a result of negative climate shocks. Third, higher mitigation expenditures may arise not only as a result of greater optimal adaptation expenditures, but also because of increased adaptation to the incentives for mitigation provided by richer countries.

Keywords: IDB-WP-417 (search for similar items in EconPapers)
JEL-codes: Q52 Q54 (search for similar items in EconPapers)
Date: 2013-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Optimal Adaptation and Mitigation to Climate Change in Small Environmental Economies (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:4668

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