In this project we are investigate the trade off between countries’ investments in adaptation and mitigation. We study how the investment behaviour in these two types of investments differs between types of countries (where countries differ in terms of vulnerability).
Mitigation has the character of a public good and adaptation is of private character. We argue that adaptation can be seen as a “disaster insurance” that affects each country’s vulnerability, i.e. by investing in adaptation countries becomes less vulnerable to potential climate change costs, but such investments does not affect the risk of climate change per se. Mitigation on the other hand affect the risk of climate change globally, but since this investment is of a public good character other countries need to invest as well for the risk to be reduced. Hence, there is a trade off between reducing a public risk and a private risk. This project consists of several experiments.
Our immediate research questions are: What is the effect of vulnerability on the individual investment decision (cooperation)? Does risk aversion affect the investment decision given that the effect of mitigation is uncertain (with a probability that a disaster will occur even if countries mitigate)? Our design frames the social dilemmas in terms of potential losses instead of gains and therefore will yield insights about individual’s behaviour in uncertain loss environments for varying levels of vulnerability to climate disasters.
