The Dynamics of Adaptation and Mitigation
12:00 - 13:30
In the fight against climate change, two main strategies are available: mitigation and adaptation. Mitigation is represented as a global public good, while adaptation as a private good that accumulates over time. Moreover, mitigation produces benefits only in the long run, while the benefits from adaptation occur mainly in the short run. The paper explores the relationship between adaptation and mitigation in a dynamic model of contribution to a public good. It is shown that the impact of adaptation on mitigation is ambiguous. Due to the presence of adaptation, the incentives to free-ride are reduced because the benefits from the public good are lower. At the same time, however, adaptation has a strategic effect, which induces a decrease in the equilibrium mitigation effort. Indeed, by adapting each country can commit to a lower mitigation effort, and, as a consequence, force the other countries to increase their own mitigation efforts.