The Adaptive Investment Effect: Evidence from Chinese Provinces

Kamiar Mohaddes and Rhys Williams

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper investigates the so-called “adaptive investment effect", a redirection of investment in productive capital towards adaptive capital with a view to mitigating the negative effects of climate change. We estimate the costs associated with the adaptive investment effect using data on Chinese provinces and find that the impact of investment on economic growth is reduced by between 27% and 37% in provinces investing more in adaptive capital. This implies that the social cost of carbon is higher than existing studies suggest, making it more urgent for policymakers to take action against climate change.

Keywords: Climate change; adaptation; investment; China (search for similar items in EconPapers)
JEL-codes: C33 O40 O53 Q51 Q54 (search for similar items in EconPapers)
Date: 2020-04-24
New Economics Papers: this item is included in nep-cna and nep-env
Note: km418
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: The adaptive investment effect: Evidence from Chinese provinces (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2046

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