Climate Policy Must Favour Mitigation Over Adaptation.

Summary In climate change policy, adaptation tends to be viewed as being as important as mitigation. In this article we present a simple yet general argument for which mitigation must be preferred to adaptation. The argument rests on the observation that mitigation is a public good while adaptation is a private one. This implies that the more one disaggregates the units in a social welfare function, i.e. the more one teases out the public good nature of mitigation, the lower is average income and thus less money (per region, country or individual) is available for adaptation and mitigation. We show that, while this reduces incentives to invest in the private good adaptation, it increases incentives to invest in the public good mitigation since even small contributions of everyone can have significant impacts at the large. Conclusively, private adaptation thus must be viewed as a significant loss to global welfare. When taking this result to the data we find that a representative policy maker who relies on world-aggregated data would invest in both adaptation and mitigation, just as the previous literature recommends. However, a representative policy maker who relies on countrylevel data, or data at further levels of disaggregation, would optimally only invest in mitigation.