Adaptation to Climate Change: How Does Heterogeneity in Adaptation Costs Affect Climate Coalitions?

Abstract

We examine how adaptation to climate change affects the incentives to ratify international environmental agreements (IEAs). In particular, we study the effects of two aspects on the incentives to join a coalition. First, we analyze cross-country differences in adaptation costs. Second, we investigate the role of carbon leakage. We find that the incentives to join IEAs remain unchanged with cross-country differences in adaptation when there is no carbon leakage, while these cross-country differences may strengthen the incentives to join IEAs with leakages. Our results emphasize that policies directed at reducing cost differences and carbon leakage may also affect the success and failure of IEAs.