Mitigation, Adaptation and Cooperation in Response to Climate Disaster
Simon Elgersma – University of Groningen, Pays-Bas
Séminaire hybride au GERAD ou Zoom
We consider the tradeoff between mitigation and adaptation in a transboundary pollution game with an environmental regime shift. Countries can lower their emissions to decrease the likelihood that a regime shift takes place or proactively invest in adaptive capital to reduce the impact of the regime shift. We solve for the social planner outcome and the Markov Perfect Nash Equilibrium (MPNE) and study how the option to adapt affects incentives to mitigate, precautionary behavior and welfare. In the social planner outcome, adaptation complements mitigation and increases welfare, but in the non-cooperative outcome adaptation crowds out mitigation and lowers welfare. Finally, we introduce efficient procedures to numerically calculate MPNE in differential games that cannot be solved analytically.
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Lieu
Pavillon André-Aisenstadt
Campus de l'Université de Montréal
2920, chemin de la Tour
Montréal Québec H3T 1J4
Canada