Total Costs and Budgetary Effects of Adaptation to Climate Change: An Assessment for the European Union

Adaptation to climate change is gaining increasing relevance in the public debate of climate policy. However, detailed and regionalised cost estimates as a basis for cost-benefit-analyses are rare. We compose available cost estimates for adaptation in Europe, and in particular Germany, Finland and Italy. Furthermore, a systematic overview on fiscal aspects of adaptation is provided, with focus on budgetary effects of adaptation in the different impact sectors. Combining cost estimates, considerations on fiscal aspects and governmental interventions in adaptation processes, we present data-based guesses of public adaptation costs in the EU, divided by impact sectors. The findings show an expectedly large public burden in the adaptation of transport infrastructure and coastal protection, while high adaptation costs in the agriculture sector are predominantly private. The change in energy demand may well lead to a significant decrease in public expenditure. Considering the regional heterogeneity of adaptation measures and the high uncertainty of quantitative adaptation analyses, further research in the form of bottom-up-studies is needed.adaptation, climate change, adaptation costs, fiscal effects, governmental intervention

Total costs and budgetary effects of adaptation to climate change: An assessment for the European Union

Adaptation to climate change is gaining increasing relevance in the public debate of climate policy. However, detailed and regionalised cost estimates as a basis for cost-benefit-analyses are rare. We compose available cost estimates for adaptation in Europe, and in particular Germany, Finland and Italy. Furthermore, a systematic overview on fiscal aspects of adaptation is provided, with focus on budgetary effects of adaptation in the different impact sectors. Combining cost estimates, considerations on fiscal aspects and governmental interventions in adaptation processes, we present data-based guesses of public adaptation costs in the EU, divided by impact sectors. The findings show an expectedly large public burden in the adaptation of transport infrastructure and coastal protection, while high adaptation costs in the agriculture sector are predominantly private. The change in energy demand may well lead to a significant decrease in public expenditure. Considering the regional heterogeneity of adaptation measures and the high uncertainty of quantitative adaptation analyses, further research in the form of bottom-up-studies is needed. --adaptation,climate change,adaptation costs,fiscal effects,governmental intervention

Good enough! Are socially responsible companies the more successful environmental innovators?

The link between Corporate Social Responsibility (CSR) activities and financial performance of firms has been intensively examined and debated in academics and politics, but the connection to innovation has so far lacked research attention. This paper investigates whether CSR is complementary to environmental innovations, so that a joint introduction of both strategies generates a higher financial performance than the application of one or none of the strategies. We analyse if environmental innovators can generate higher financial performance by signalling their environmental engagement through CSR. For this purpose, we use panel data of environmental R&D activity together with a CSR variable on the Global Reporting Initiative (GRI) and analyse their effect on the financial performance of a firm. The novelty of our work is the complementary approach with which we examine the effect of a joint strategy of environmental R&D and CSR on financial performance. Although our results support the view of strategic complements for environmental R&D and GRI, we cannot conclude that this is also true for other types of CSR signalling environmental engagement

The road to Paris : towards a fair and effective climate agreement?

Auch in unsicheren Zeiten fungieren frühe und glaubwürdige Zusagen, etwa INDCs ("Intended Nationally Determined Contributions", Angestrebte national festgelegte Beiträge), als wichtige Signale für zukünftige Kooperationsbereitschaft in der Klimapolitik. In Anbetracht unterschiedlicher Umstände und Bedürfnisse verschiedener Staaten ist davon auszugehen, dass die Regeln zur Mindestbeteiligung unter den Hauptakteuren umstritten bleiben werden. Koordinierte Emissionssenkung durch die Verknüpfung unterschiedlicher Emissionshandelssysteme reduziert die Kosten globaler Klimaziele. Internationaler Handel und Eigeninteresse können Industrienationen dazu bringen, Anpassungsmaßnahmen in Entwicklungsländern zu fördern - dies stellt einen potenziell wichtigen Teil eines fairen und effektiven globalen Klimaabkommens dar

Coordination under threshold uncertainty in a public goods game

We explored experimentally how threshold uncertainty affects coordination success in a threshold public goods game. Whereas all groups succeeded in providing the public good when the exact value of the threshold was known, uncertainty was generally detrimental for the public good provision. The negative effect of threshold uncertainty was particularly severe when it took the form of ambiguity, i.e. when players were not only unaware of the value of the threshold but also of its probability distribution. Early signaling of willingness to contribute and share the burden equitably helped groups in coping with threshold uncertainty.public good, threshold uncertainty, ambiguity, experiment

Consistent or balanced? : On the dynamics of voluntary contributions

We investigate the dynamic effects of a charitable lottery and an income tax on donations. The analysis is based on a two-round dictator game with the subject’s charity of choice as recipient and additional incentives in the first round only. The immediate effect of a charitable lottery leads to higher contributions and we cannot find substantial crowding out of voluntary contributions in the presence of an income tax. These economic interventions weakly spill-over to the subsequent donation decisions without additional incentives. Our results suggest the presence of consistency seeking behaviour. This is especially true for a subgroup of participants with a rule-based mind-set and our research shows the importance of the subjects’ moral framework in the context of dynamic pro-social behaviour

Coordination under threshold uncertainty in a public goods game

We explored experimentally how threshold uncertainty affects coordination success in a threshold public goods game. Whereas all groups succeeded in providing the public good when the exact value of the threshold was known, uncertainty was generally detrimental for the public good provision. The negative effect of threshold uncertainty was particularly severe when it took the form of ambiguity, i.e. when players were not only unaware of the value of the threshold but also of its probability distribution. Early signaling of willingness to contribute and share the burden equitably helped groups in coping with threshold uncertainty. --Public good,threshold uncertainty,ambiguity,experiment

Improving voluntary public good provision by a non-governmental, endogenous matching mechanism : experimental evidence

Social norms can help to foster cooperation and to overcome the free-rider problem in private provision of public goods. This paper focuses on the enforcement of social norms by a self-introduced punishment and reward scheme. We analyse if subjects achieve to implement a norm-enforcement mechanism at their own expense by applying the theory of non-governmental norm-enforcement by Buchholz et al. (2014) in a laboratory experiment. Based on their theory without central authority and endogenously determined enforcement mechanism, we implement a two-stage public good game: At the first stage subjects determine the strength of penalty/reward on their own and in the second stage they decide on their contributions to the public good. We find that the mechanism by Buchholz et al. (2014) leads to a higher public good contribution than without the use of any mechanism. Only in a few cases groups end up with a zero enforcement mechanism. This result indicates that subjects are apparently willing to contribute funds for implementing an enforcement mechanism. Moreover, higher enforcement parameters lead to higher public good contributions in the second stage, although too high enforcement parameters lead to unreachable theoretical optima

How do different compensation schemes and loss experience affect insurance decisions? Experimental evidence from two independent and heterogeneous samples

Although natural hazard insurance is advocated as an important means of risk management, private insurance demand often remains below critical levels. Prior loss experience and the design of governmental relief schemes are two factors potentially influencing insurance decisions. We address these two elements in monetary incentivized experiments which include representations of natural hazard insurance schemes in Europe. We draw on two very different samples: First, we run a laboratory experiment with a student subject pool in Germany. In addition, we replicate the experiment as an online experiment with citizens of flood-prone areas in the city of Dornbirn (Austria). The experiment reflects two possible designs of governmental relief schemes: partial but guaranteed relief and full but nonguaranteed relief. The risk of loss is kept constant over ten consecutive rounds to analyze the effect of loss experience. In both of our samples, the design of the governmental relief scheme has no effect on insurance decisions. Furthermore, prior loss experience adversely affects insurance decisions. Uninsured subjects tend to remain uninsured after experiencing a loss, and previously insured subjects often switch to non-insurance in the rounds after the loss. These results have important policy implications, e.g., for the optimal design of flood risk communication

Coordination under threshold uncertainty in a public goods game

We explored experimentally how threshold uncertainty affects coordination success in a threshold public goods game. Whereas all groups succeeded in providing the public good when the exact value of the threshold was known, uncertainty was generally detrimental for the public good provision. The negative effect of threshold uncertainty was particularly severe when it took the form of ambiguity, i.e. when players were not only unaware of the value of the threshold but also of its probability distribution. Early signaling of willingness to contribute and share the burden equitably helped groups in coping with threshold uncertainty