Adapting to climate change: Is cooperation good for the environment?

- We consider an international environmental agreement on R&D in adaptation.
- When adaptation is a public good, the size of the IEA is large.
- The larger the cost of R&D in adaptation, the larger the coalition size.
- The smaller the technological spillover, the larger the coalition size.
- Adaptation and cooperation increase total pollution.

We consider the formation of an international environmental agreement focusing on adaptation to climate change. Members of the agreement fully share their knowledge and determine their investments in R&D by maximizing their joint welfare, while non-members optimize their individual payoffs. Using a three-stage game formalism, we obtain that a large coalition is achievable and that total emissions increase with the size of the agreement. The welfare implications are parameter dependent.