Balancing Expenditures on Mitigation of and Adaptation to Climate Change: An Exploration of Issues Relevant to Developing Countries

48 Pages Posted: 20 Apr 2016

See all articles by Franck Lecocq

Franck Lecocq

World Bank - Development Economics Research Group - PFCplus Research

Zmarak Shalizi

World Bank - Research Department

Date Written: August 1, 2007

Abstract

Although climate policies have been so far mostly focused on mitigation, adaptation to climate change is a growing concern in developed and developing countries. This paper discusses how adaptation fits into the global climate strategy, at the global and national levels. To do so, a partial equilibrium optimization model of climate policies - which includes mitigation, proactive adaptation (ex ante), and reactive adaptation (ex post) - is solved without and with uncertainty. Mitigation, proactive adaptation, and reactive adaptation are found to be generally jointly determined. Uncertainty on the location of damages reduces the benefits of targeted proactive adaptation with regard to mitigation and reactive adaptation. However, no single country controls global mitigation policies, and budget constraints might make it difficult for developing countries to finance reactive adaptation, especially if climate shocks affect the fiscal base. Rainy-day funds are identified as a supplemental instrument that can alleviate future budget constraints while avoiding the risk of misallocating resources when the location of damages is uncertain.

Keywords: Environmental Economics & Policies, Economic Theory & Research, Educational Sciences, Disability, Social Inclusion & Institutions

Suggested Citation

Lecocq, Franck and Shalizi, Zmarak, Balancing Expenditures on Mitigation of and Adaptation to Climate Change: An Exploration of Issues Relevant to Developing Countries (August 1, 2007). World Bank Policy Research Working Paper No. 4299. Available at SSRN: https://ssrn.com/abstract=1004841

Franck Lecocq (Contact Author)

World Bank - Development Economics Research Group - PFCplus Research ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-1000 (Phone)
202-477-6391 (Fax)

Zmarak Shalizi

World Bank - Research Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/zshalizi

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