Abstract
In climate change policy, adaptation tends to be viewed as being as important as mitigation. In this article we present a simple yet general argument for which mitigation must be preferred to adaptation at the global level. The argument rests on the observation that mitigation is a public good while adaptation is a private one. We show that the more one teases out the public good nature of mitigation, the lower will be the incentives to invest in the private good adaptation while it increases a policy maker’s incentives to invest in the public good mitigation. Conclusively, private adaptation yields a significant loss to global welfare. We then discuss what this implies for the current state of the art literature and what should be the lesson for future research.
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Notes
This attitude towards adaptation seems to be omnipresent in major international and national governments. For example, the European Union places adaptation highly on its policy agenda in the 2013 EU Strategy on Adaptation; the United Nations Environmental Program developed the National Adaptation Plan which lends support to national governments in their adaptation; and the UNFCCC promises to channel 100 billion USD to developing countries through its Green Climate Fund by 2020.
Here we follow the standard definition in Samuelson (1954) of public and private goods.
I thank Reyer Gerlagh for raising this point.
As Geir Asheim suggested, there is another way in which the model can be set up. We could instead have written \(V=NU\bigg ((1-D(M,A/N))\big (W -A/N-M/N\big )\bigg )\), which implies that as N increases we make abatement less public. The intuition is similar and the results precisely the same. Both approaches are perfectly defensible and thus it is only a matter of taste which one to use.
Using the authors’ notation and denoting by N the number of agents we re-write their pollution equation (2.1) as \(\dot{P}=NE-\alpha P\), and their instantaneous utility as \(N(\beta E-E^2/2-\gamma _2 P^2_2)\). Their model corresponds to the case of \(N=1\).
Using their notation this would yield an instantaneous utility function of \(u(C,P,D)=N(\ln (C(t)/N)-\eta (D(t)){P(t)^{1+\mu }\over 1+\mu })\) and a pollution constraint of \(\dot{D}(t)=I_D/N-\delta D\), where \(I_D/N\) implies that investments in adaptation stock are equally split over all individuals N.
The easiest way to do this is to divide their adaptation expenditure in the damage function by N.
The reason for it not being zero is because they assume limit conditions that always lead to an interior solution.
Additional points against adaptation are significant biophysical, financial and social constraints that make adaptation a particularly weak policy option. Biophysical constraints tend to be related to natural thresholds that, if once crossed (e.g. desertification), seriously inhibit both nature’s as well as mankind’s ability to adapt. Financial constraints arise if, for example, poor agricultural households cannot afford to buy the seeds that new climatic conditions require, or to insure themselves sufficiently against greater climate variability; or those needing to migrate have not sufficient funds to do so. Social limits to adaptation require us to know whether we really want to live with three meter high flood barriers around the house; or whether we believe that societies can really easily cope with large-scale climate migrants especially if there are strong cultural differences.
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For comments I thank three anonymous referees, Moutaz Altaghlibi, Geir Asheim, Ian Bateman, Partha Dasgupta, Reyer Gerlagh, Anna Lungarska, Agustin Perez-Barahona, Rick van der Ploeg, Armon Rezai, Sjak Smulders, Cees Withagen and Amos Zemel, as well as participants at the 2016 SURED conference in Banyuls-sur-Mer, 2016 EAERE conference in Zurich and the 2016 FAERE conference in Bordeaux. I also thank Dani for mitigating my adaptation problems to some of the comments that I had on this article over the years.
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Schumacher, I. Climate Policy Must Favour Mitigation Over Adaptation. Environ Resource Econ 74, 1519–1531 (2019). https://doi.org/10.1007/s10640-019-00377-0
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DOI: https://doi.org/10.1007/s10640-019-00377-0