Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76764
Authors: 
Buob, Seraina
Stephan, Gunter
Year of Publication: 
2008
Series/Report no.: 
Discussion Papers, Department of Economics, Universität Bern 08-04
Abstract: 
Mitigation and adaptation are the most important strategies in combating global climate change. It is expected that in a post Kyoto world industrialized countries have to engage in greenhouse gas abatement, and to support developing countries in adapting to climate change. Within the framework of a non-cooperative Nash game we analyze, whether funding adaptation is incentive compatible in the sense that it stipulates mitigation. In particular it is the aim of this paper to discuss: (1) How does foreign funding of adaptation affect mitigation and regional welfare? (2) Under which conditions is it economically rational to fund adaptation in developing regions? We find that, if strict complementarity between adaptation and mitigation exists, funding adaptation increases both global mitigation and the donors' welfare, but negatively affects the recipients' welfare. The later only benefit, if maladaptation or adaptation, which is neutral to mitigation, is funded, which, however, makes the donors worse off.
Subjects: 
climate change
mitigation and adaptation
funding of private goods
JEL: 
C72
F51
Q54
Document Type: 
Working Paper

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