Adaptation and emissions: halo effect or complacency?

The two main tools to address the impacts of greenhouse gases (GHGs) are abatement of emissions and adaptation to climate change. In this context, the option to adapt raises the potential for complacency concerning emission abatement efforts by countries that might adapt or over-adapt. This concern is widely discussed by both policy makers and the nascent theoretical literature on the adaptation-abatement nexus. As it stands, there is no clear consensus about the impact of adaptation efforts on emission abatement. In our study, we provide the first empirical evidence on the relation between adaptation and emissions. We specifically test whether adaptation affect emissions in a world where adaptation funds are available. We consider several measures of emissions such as CO2 emissions, per capita CO2 emissions, dollar CO2 emissions, CO2 intensity, as well as methane, nitrous oxide and other greenhouse gases. Specifically, we apply a difference-in-differences analysis where we compare the emissions of developing countries that received adaptation funding relative to other developing countries that did not receive such funding before and after the fund approval. We find that receiving adaptation funding significantly and negatively affects all measures of CO2 emissions except CO2 intensity, providing preliminary evidence of the presence of a halo effect of adaptation funding. As it was clear since the adaptation option was first discussed at the international level, policymakers have been hesitant to emphasize it at the risk of upsetting emissions abatement efforts. We thus show that such fears can be alleviated by the fact that enhanced adaptation does not induce additional emissions; on the contrary, in many instances, adaptation leads to lower emissions.