Adaptation to climate change and climate variability: Do it now or wait and see?

Daiju Narita and Martin Quaas

No 1809, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: As growing attention is paid to climate change adaptation as an actual policy issue, the significant meaning of climate variability in adaptation decisions is beginning to be recognized. By using a real option framework, we shed light on how climate change and climate variability affect individuals' (farmers') investment decisions with regard to adaptation. As a plausible case in which the delay carries policy implications, we investigate farmers' choices when adaptation involves the use of an open-access resource (water). The results show that uncoordinated farmers with a high risk aversion may under-adapt while farmers with a low risk aversion would over-adapt under the same conditions. Private adaptation should be supported or discouraged accordingly if farmers are not convinced about the possibilities of collective resource management in the long run.

Keywords: adaptation to climate change; climate variability; risk and uncertainty; real option; water; open-access resources (search for similar items in EconPapers)
JEL-codes: D81 Q20 Q54 (search for similar items in EconPapers)
Date: 2012
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https://www.econstor.eu/bitstream/10419/67347/1/731582497.pdf (application/pdf)

Related works:
Journal Article: ADAPTATION TO CLIMATE CHANGE AND CLIMATE VARIABILITY: DO IT NOW OR WAIT AND SEE? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1809

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