Adaptation Effectiveness and Free-Riding Incentives in International Environmental Agreements

Abstract

While an international agreement over the reduction of greenhouse gases (GHGs) emissions proves to be elusive, there is a large and growing support for investment in developing more e¤ective technologies to adapt to climate change. We show that an increase in e¤ectiveness of adaptation will diminish the incentive of individual countries to free-ride on a global agreement over emissions. Moreover, we show that this positive e¤ect of an increase in adaptation's e¤ectiveness can also be accompanied by an increase in the gains from global cooperation over GHGs emissions.JEL Classi…cations: Q54, Q59

Adaptation to Climate Change: How Does Heterogeneity in Adaptation Costs Affect Climate Coalitions?

“…(25) and (28)). Moreover, the possibility to adapt makes these best response functions flatter (Benchekroun et al, 2011). This implies a lower willingness to reduce emissions when other countries increase theirs.…”

“…And finally, what is the role of carbon leakage, combined with adaptation, in the incentives to join IEAs? We address these questions within 1 The two exceptions are Benchekroun et al (2011) and . 2 These findings are from "The Economics of Adaptation to Climate Change (EACC)" study in 2011 by the World Bank.…”

“…We are only aware of two studies directly studying adaptation in the context of IEAs. Benchekroun et al (2011) study the effect of an improvement in adaptation technology on free riding incentives while focus on the impact of adaptation on the stable size of the coalition. Our paper differs from these two papers because we analyze cross-country differences in adaptation costs and the role of carbon leakage in addition to adaptation.…”

Catastrophe and Cooperation

“…But when this literature considers the case of multiple decision makers, they do not focus on the question whether the cooperative outcome can be sustained in a Nash equilibrium. 6 This paper is an attempt to jointly investigate these issues in a tractable framework.…”

“…However, after a catastrophic shift has occurred, adaptation becomes the natural response. This is an important issue that is receiving wider attention in the literature, see, e.g., Benchekroun et al [6] who show that an increase in the effectiveness of adaptation can diminish the incentive to free-ride.…”