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Adaptation, Mitigation and Risk-Taking in Climate Policy

Author

Listed:
  • Heike Auerswald
  • Kai A. Konrad
  • Marcel Thum
Abstract
The future consequences of climate change are highly uncertain. Today, the exact size of possible future damages are widely unknown. Governments try to cope with these risks by investing in mitigation and adaptation measures. Mitigation aims at a reduction of greenhouse gas emissions whereas adaptation reduces the follow-up costs of climate change. In contrast to the existing literature, we explicitly model the decision of risk-averse governments on mitigation and adaptation policies. Furthermore we also consider the interaction of the two strategies. Mitigation efforts of a single country trigger crowding out as other countries will reduce their mitigation efforts. We show that, under fairly mild conditions, a unilateral increase in mitigation efforts of a single country can even increase global emissions. In contrast, a unilateral commitment to large adaptation efforts benefits the single country and may reduce the global risk from climate change at the expense of other countries.

Suggested Citation

  • Heike Auerswald & Kai A. Konrad & Marcel Thum, 2011. "Adaptation, Mitigation and Risk-Taking in Climate Policy," CESifo Working Paper Series 3320, CESifo.
    • Handle: RePEc:ces:ceswps:_3320
    as

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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp3320.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    climate change; adaptation; mitigation; risk-taking;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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