We examine the stability of international environmental agreements when they include both adaptation and mitigation policies. We assume that adaptation requires a prior irreversible investment and presents the characteristics of a private good by reducing a country's vulnerability to the impact of pollution, while mitigation policies produce a public good by reducing the total amount of pollution.
Using a stylized model, we show that adaptive measures can be used strategically and that their inclusion in environmental agreements enhances agreement stability and can even lead to full cooperation. However, adaptation does not help cooperation in mitigation policies. Finally, we evaluate how including adaptive measures for climate change in international environmental agreements affects welfare and overall pollution.
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