The Intricacy of Adapting to Climate Change: Flood Protection as a Local Public Goods Game

40 Pages Posted: 27 Mar 2017

See all articles by Anton A. Bondarev

Anton A. Bondarev

WWZ Universität Basel

Beat Hintermann

University of Maryland - Department of Agricultural & Resource Economics

Frank Krysiak

University of Basel

Ralph Winkler

University of Bern - Department of Economics; University of Bern - Oeschger Centre for Climate Change Research

Date Written: March 06, 2017

Abstract

We study adaptation to climate change in a federalist setting. To protect themselves against an increase in flood risk, regional governments choose among adaptation measures that vary with respect to their costs, the level of protection they offer, and the presence and nature of spillovers to neighboring regions. The central government can provide co-funding in response to specific proposals. If it has to deduce the vulnerability of regions by their actions, the resulting adaptation measures are too costly from a social point of view. The results show that adaptation cannot be expected to be efficient without specifically designed incentive schemes.

Keywords: climate change, adaptation, federalism, asymmetric information, vertical interaction, spillovers, non-cooperative games, signaling

JEL Classification: C720, C730, H230, H410, H770, Q520, Q540, Q580, R530

Suggested Citation

Bondarev, Anton A. and Hintermann, Beat and Krysiak, Frank and Winkler, Ralph, The Intricacy of Adapting to Climate Change: Flood Protection as a Local Public Goods Game (March 06, 2017). CESifo Working Paper Series No. 6382. Available at SSRN: https://ssrn.com/abstract=2941425

Anton A. Bondarev

WWZ Universität Basel ( email )

Basel, 4051
Switzerland

Beat Hintermann

University of Maryland - Department of Agricultural & Resource Economics ( email )

Symmons Hall, Rm 2200
University of Maryland
College Park, MD 20742-5535
United States

Frank Krysiak

University of Basel ( email )

Petersplatz 1
Basel, CH-4003
Switzerland

Ralph Winkler (Contact Author)

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, 3001
Switzerland
+41 31 631 4508 (Phone)

HOME PAGE: http://www.ralph-winkler.de

University of Bern - Oeschger Centre for Climate Change Research ( email )

Zähringerstrasse 25
Bern, 3012
Switzerland

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