Adaptation as an effort allocation option


Adaptation to climate changeFor many years, many many years, economist used to assume that economic agents can allocate their resources only to productive purposes. So if I (as an economic agent) have some resources like two hours of time, a piece of wood and a knife, I would sit in my office and will make a wooden toy using what I have. Then they considered trade, where agents allocate resources to, to be able to exchange or sell their products and services.

In last 40 years appropriation and protection have been added to the effort allocation list which is also known as the theory of production and conflict. According to this theory, an agent can allocate some of its resources to attack other agents and transfer their resources/products artificially to itself.

In the example, imagine that I spend half of my time creating a couple of wooden toys, and then leave my office and use my knife to threaten my neighbor and steal his products. There are good papers on this idea which analyze how people make their decision on how much to allocate to production, how much to protect their production and what would be left for conflict.

So, what I am trying to bring to this table as a new contribution is to think of ADAPTATION as a new effort allocation option. Adaptation looks critical not only as it has gained attention as a key response to climate change, but as it seems to be an important action we are going to undertake in future to be able to cope with environmental crises around us.

Agents would allocate resources to adaptation to be able to keep being productive and what would make this investment rational and logical is the higher chances of experiences environmental challenges in future. So, as an agent to be able to have my production process functional in critical conditions, I should allocate resources to adaptation. What is a good proportion of resources to be allocated to adaptation? That would be a million dollar question.
I would write on this issue further very soon.