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Adaptation to climate change: when is the public-private governance a good solution?

Author

Listed:
  • Anne Stenger

    (Laboratoire d'Economie Forestière, INRA - AgroParisTech
    BETA, Bureau d’Economie Théorique et Appliquée, UMR 7522 CNRS Université de Strasbourg.)

  • Marco Buso

    (Laboratoire d'Economie Forestière, INRA - AgroParisTech
    University of Padova, department of economics and management)

Abstract

The impact of climate change on economic activities is becoming an increasingly impor- tant issue that must be adequately taken into account by private and public stakeholders. In this paper, we study the optimal public and/or private governance necessary to adapt natural resources owned by private agents to the new weather conditions. We compare the private case with two types of public-private governances where the government inter- venes by paying part of the adaptation costs, or through contingent transfers on the basis of verifiable outcomes. We conclude that in most cases, without government intervention, the private agent underinvests. However, public intervention can be excessively costly for the society (public finance distortion). Moreover, comparing the two different public-private governances, we conclude that the best way for the government to intervene strictly depends on the type of adaptation the private agent wants to apply.

Suggested Citation

  • Anne Stenger & Marco Buso, 2015. "Adaptation to climate change: when is the public-private governance a good solution?," Working Papers - Cahiers du LEF 2015-14, Laboratoire d'Economie Forestiere, AgroParisTech-INRA, revised 2015.
    • Handle: RePEc:lef:wpaper:2015-14
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    File URL: http://www6.nancy.inra.fr/lef/Cahiers-du-LEF/2015/2015-14
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    More about this item

    Keywords

    climate change; adaptation; externality; PPPs;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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