Political Economy of Climate Change Adaptation

We examine how political support for climate adaptation evolves as climate risk and inequality rise. With heterogeneous beliefs and incomes, households vote on publicly funded adaptation. As extreme events accumulate, beliefs about climate risk converge, and the value of protection grows. These forces generate a political tipping point: young sceptics - facing rising housing scarcity and future damages - shift toward stronger adaptation, realigning with old realists and triggering a discrete increase in public intervention. Yet even after this political shift, adaptation remains below the social optimum due to a "tragedy of the horizon'' effect. Rising inequality can induce a second tipping point, but its effect is ambiguous, as gradual inequality depresses adaptation through political backlash, while rapidly widening inequality pushes voters toward greater protection.