Conference Agenda

Integrated assessment models used to inform climate policy typically do not explicitly represent adaptation, based on the assumption that implicit optimal adaptation does not meaningfully interact with mitigation decisions. I revisit this assumption by extending the regional RICE model to include both flow and stock adaptation alongside mitigation. I show that the non-interaction result depends on a specific property of the damage function: adaptation must reduce damages without affecting marginal damages. When this condition holds, explicit adaptation leaves efficient mitigation pathways unchanged regardless of whether adaptation is modelled as a flow or a capital stock. However, when I introduce constraints on total climate investment—reflecting the limited capacity of resource-constrained regions to simultaneously invest in mitigation and adaptation—the distribution of mitigation burdens shifts. Under binding investment constraints and a fixed global carbon budget, mitigation burdens are reallocated from poor to rich regions. This counterintuitive result arises because shifting mitigation to poor regions would crowd out adaptation investment where climate damages are highest. These findings provide an efficiency-based argument for reallocating mitigation burdens towards richer regions, complementing equity-based arguments that have dominated this debate.