Ralph Winkler (University of Bern): "On the Relationship between Adaptation and Mitigation"

I complement the result of Sakamoto et al. (2020) that it may be in the best interest of developed countries to fund adaptation measures in developing countries in a more general but static model framework. I derive a necessary condition for the North to have an incentive to invest into adaptation measures in the South for generic benefit and damage functions. Employing a quadratic benefit function for the South, in which overall productivity and absolute emission intensity depend on North’s adaptation investments, I find that the North is most likely to invest into adaptation measures in the South if the relative decrease in emission intensity is large, the relative increase in productivity is small, and equilibrium emissions of the South are close to business-as-usual emissions. My results have important policy implications for the selection of adaptation measures by international adaptation funding organizations, such as the Green Climate Fund.