Climate Adaptation Law: Governing Multi-Level Public Goods Across Borders.

• Author: Banda, Maria L.

TABLE OF CONTENTS

1. INTRODUCTION 1029 II. THE ADAPTATION CHALLENGE 1033 A. Optimal Adaptation vs. Maladaptation 1033 B. The Problem of Externalities and Coordination 1034 C. Multi-Level Public Goods 1037 D. Overcoming Externalities 1039 III. CURRENT STATE OF CLIMATE ADAPTATION LAW & 1045 GOVERMENCE IV. FINDING THE DIVIDING LINE 1052 A. Adaptation as a Pure Domestic Public Good 1052 B. Adaptation as a Transboundary or a Global Public Good 1055 1. Transboundary Public Goods: The Water-Energy-Food 1056 Nexus 2. Global Public Goods: The Climate-Security Nexus 1059 V. THE LAW AND GOVERNANCE OF MULTI-LEVEL CLIMATE 1062 ADAPTATION: A PROPOSED FRAMEWORK A. Treaty Regimes 1062 B. General International Law 1065 C. Enforcement 1067 D. Risks of Overreach 1069 VI. CONCLUSION 1070 I. INTRODUCTION

   The increasingly severe and irreversible effects of climate change around the world make adaptation (1) to a changing climate an immediate and urgent global priority, as the Paris Agreement on Climate Change acknowledged. (2) International action on mitigation remains vital, (3) but even if states were to aggressively reduce their greenhouse gas emissions today, climate impacts--such as record floods and droughts, superstorms, wildfires, falling crop productivity, and coastal erosion--have by now become unavoidable in many regions, as any benefits of new emissions reductions would not be felt for decades. (4) Originally estimated at $100 billion per year, (5) the cost of climate adaptation in developing countries alone could rise to between $280 and $500 billion annually by 2050. (6) Developed countries are not spared either. According to estimates, weather- and climate-related disasters have cost the US economy at least $240 billion a year over the past decade. (7) In 2017 alone, the United States suffered sixteen such disasters with losses exceeding $1 billion each, causing 362 fatalities and $306 billion in damages--setting a new US annual record. (8)

   A large share of the projected losses can be avoided through preventive adaptation, (9) but investment has been slow to materialize. As this Article explains, the adaptation finance gap is problematic not only for the directly impacted communities, but also for international society as a whole since climate vulnerability in one part of the world could in some cases compromise resilience in the rest of the world.

   Part of the implementation challenge is conceptual and requires two shifts in how we think about adaptation law and governance. First, while it is widely accepted that climate mitigation is a public good (since one actor's mitigation actions, no matter where or how small, will benefit everyone else (10)), climate adaptation is not usually thought of in these terms. (11) However, optimal adaptation, this Article argues, should be treated as a public good--a good that can be enjoyed by many for free, like national defense or clean air. Everyone is better off in a resilient community that can withstand and continue to thrive despite climate impacts, whether they contributed to resilience or not. This encourages free-riding. As such, we would expect that adaptation investment will continue to be underprovided by the market in the absence of an effective legal regime. Meanwhile, poorly designed adaptation could generate negative externalities, which we would expect to be oversupplied.

   Second, even though research on climate adaptation and resilience is expanding rapidly across disciplines, adaptation is still largely treated as a local matter. Consequently, positive international externalities of optimal adaptation (and negative externalities of maladaptation) are overlooked in the literature. (12) This is an important oversight. While climate adaptation in many cases will be a pure domestic public good (governable by domestic laws), in some scenarios it will also be a transboundary or a global public good requiring international cooperation. Parties to the Paris Agreement recognized this in Article 7(2), where they described adaptation not only as a "global challenge," but also one that has "local, subnational, national, regional and international dimensions." (13) However, they did not consider what this means in practical terms for international law and governance.

   To date, there has also been little effort in the literature to identify these layers of governance, examine critically their implications for legal design, or explore what role international law and institutions could play in encouraging optimal adaptation across levels. This Article aims to fill those gaps. It provides a preliminary analysis of how a multi-level public good like climate adaptation should be governed to meet the Paris Agreement's and national adaptation objectives. It contributes to legal literature and policy by reframing the issue, proposing a new analytical framework, and identifying priority areas for institution building. Specifically, it makes four contributions. First, it reconceptualizes climate adaptation as a multi-level public good, comprising domestic, transboundary, and global levels. Second, it explores the implications of this conceptual shift for institutional design and international law. Third, it outlines the contours of a multilevel governance model that could help produce optimal adaptation in a transboundary setting. Finally, it identifies three priority areas for international adaptation law and governance. While this Article is primarily concerned with the international legal realm, the same analytical framework could also be employed to engage with the adaptation challenge in the domestic setting--among federal states, counties, and cities.

   The remainder of the analysis proceeds as follows. First, the Article develops a new analytical framework to reframe the adaptation challenge and considers the efficacy of market-based mechanisms (private contracting) and prescriptive regulation in the light of this framework (Part II). It introduces the concept of optimal adaptation (a public good), to be distinguished from maladaptation (a public bad), which reduces system resilience. It shows that inadequate provision of adaptation is essentially a public goods problem and that a coherent legal framework is required to restructure economic incentives, enable coordination, and remove barriers to adaptation investment. Further, it develops the concept of multi-level public goods and distinguishes between three levels of optimal adaptation: domestic, transboundary, and global. It defines optimal adaptation as a pure domestic public good where its provision can be ensured by the domestic legal system or private contracting. Where optimal adaptation cannot be guaranteed by domestic laws, it will require cross-border mechanisms that are able to anticipate and respond to the collective demand for such goods. Adaptation as a transboundary public good (which involves a smaller number of often-neighboring states) is conceptually distinct from adaptation as a global public good (which affects the international community as a whole) and requires different institutional design. Second, the Article reviews current governance arrangements (Part III). It finds that adaptation governance is already multi-level in the sense that adaptation is being addressed by a number of domestic and international institutions, but these initiatives are largely focused on adaptation's local aspects.

   Third, it attempts to draw the line between different levels of adaptation in concrete terms (Part IV). It shows that optimal adaptation will most likely be a transboundary public good where domestic water or food security depends on access to shared resources, while it will be a global public good where local climatic impacts can destabilize international peace and security. Fourth, it proposes a multi-level law and governance model to address cross-border externalities (Part V). In particular, it shows that international law can steer state policies towards optimal adaptation; however, many regimes require updating, while others are yet to be built. It concludes by reflecting on the policy implications and the potential risks and pitfalls of overreach.

2. THE ADAPTATION CHALLENGE

   Before turning to current governance arrangements and optimal institutional design, this Part first considers the challenges posed by climate adaptation for legal design and develops a comprehensive analytical framework to examine how this and similar types of public goods can be governed. First, it defines "optimal adaptation," to be distinguished from maladaptation (Part II.A). Second, it explains why optimal adaptation is a public good and why adaptation measures can give rise to positive or negative externalities (Part II.B). Third, it shows that optimal adaptation, depending on the context, can function as a domestic, transboundary, or a global public good (Part II.C). Finally, it analyzes the tools for dealing with public goods and environmental externalities (such as private contracting and regulation) at each level of governance and identifies particular difficulties encountered in the cross-border setting (Part II.D).

   1. Optimal Adaptation vs. Maladaptation

      As noted above, "adaptation" means an adjustment in activities to avoid or moderate the expected harm from climate change or its effects. (14) For example, as climate change increases the pressure on water resources, a municipality may decide to adapt by investing in a desalination plant to diversify its water supply and insulate the community from the range of risks associated with water scarcity. But not every adaptive action is optimal. In the above example, the municipality's adaptive measures would not be optimal if the construction and operation degraded the ecosystem or if it increased carbon emissions. By creating negative externalities, such measures would be a form of maladaptation (a public bad), which the Intergovernmental Panel on Climate Change (the...