Abstract:
Adaptation to climate change is an investment decision with unique challenges including uncertainty, long time horizons, and market imperfections that hinder optimal private action. Public sector involvement should address market failures while avoiding moral hazard and the crowding out of private investment through targeted knowledge dissemination and incentives. Significant disparities in adaptive capacity between and within countries create fundamental inequities in climate resilience, necessitating special policy consideration. Effective adaptation policy requires balancing public enablement with private investment through collaborative approaches that address market failures while ensuring equitable outcomes.