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Allocation of Adaptation Aid: A Normative Theory

Author

Listed:
  • Mukherjee Vivekananda

    (Department of Economics and Finance, BITS Pilani, Hyderabad Campus, Hyderabad 500078, India)

  • Rübbelke Dirk

    (Faculty of Business Administration, Technische Universität Bergakademie, 09596 Freiberg, Germany)

  • Stahlke Theresa

    (Faculty of Business Administration, Technische Universität Bergakademie, 09596 Freiberg, Germany)

  • Brumme Anja

    (Faculty of Business Administration, Technische Universität Bergakademie, 09596 Freiberg, Germany)

Abstract

The paper derives an efficient allocation rule of adaptation aid from a donor to the recipient nations, which is different from the traditional development aid literature. The design of the allocation rule takes care of the optimum reaction of the nations on receipt of the aid. It suggests that the allocation rule must take care of (i) distributional weight of the recipients on the donor’s welfare, (ii) their vulnerability to climate change, (iii) their efficiency in using the aid and (iv) their mitigation response to the aid. It discusses the way these factors can be incorporated in an implementable rule by use of the available data. The score of a nation derived from the first three factors requires an upward/downward adjustment if the adaptation aid leads to an increase/decrease of the mitigation effort of the country. A nation receiving a higher score is rewarded with higher allocation of aid. The paper suggests as a rule of thumb that the aid in the form of technical assistance requires a downward adjustment and the aid in monetary form requires an upward adjustment in the score.

Suggested Citation

  • Mukherjee Vivekananda & Rübbelke Dirk & Stahlke Theresa & Brumme Anja, 2022. "Allocation of Adaptation Aid: A Normative Theory," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 242(4), pages 471-499, August.
    • Handle: RePEc:jns:jbstat:v:242:y:2022:i:4:p:471-499:n:1
    DOI: 10.1515/jbnst-2021-0031
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    References listed on IDEAS

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    1. Theresa Stahlke, 2023. "Climate policy and the concept of co-benefits in India," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 25(1), pages 86-102, June.

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    More about this item

    Keywords

    adaptation; mitigation; international climate finance; climate change;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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