Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/155624 
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper No. 6382
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study adaptation to climate change in a federalist setting. To protect themselves against an increase in flood risk, regional governments choose among adaptation measures that vary with respect to their costs, the level of protection they offer, and the presence and nature of spillovers to neighboring regions. The central government can provide co-funding in response to specific proposals. If it has to deduce the vulnerability of regions by their actions, the resulting adaptation measures are too costly from a social point of view. The results show that adaptation cannot be expected to be efficient without specifically designed incentive schemes.
Subjects: 
climate change
adaptation
federalism
asymmetric information
vertical interaction
spillovers
non-cooperative games
signaling
JEL: 
C72
C73
H23
H41
H77
Q52
Q54
Q58
R53
Document Type: 
Working Paper
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