Among great efforts of mitigating anthropogenic climate change in past and present, adaptation to global climate change has received growing attention lately. Adaptation comprises measures, like seawalls and storm surge, erosion control, transport infrastructure enhancement, underground cabling and many more. They are necessary to deal with expected climate change impacts, such as floods, storms and heat and their associated economic, environmental and social costs. Whereas climate change mitigation is a global issue, most adaptation measures are implemented at the regional or local level due to varying climate impacts and vulnerabilities between regions. Mitigation and adaptation measures are both designed to reduce damage costs of climate change, but they also involve costs. The challenge for regional policy makers is to find a cost-effective mix of adaptation and mitigation efforts (Bosello et al. 2010; Klein et al. 2005). In the latest IPCC Fifth Assessment Report, the Working Group II calls, among others, for a better assessment of global adaptation costs, funding, and investment (IPCC 2014). In this paper, we analyze economic impacts of regional climate change adaptation strategies. From a macroeconomic point of view, adaptation measures can be classified as additional final demand, mainly investments. Even though, such investments involve costs, they also drive the demand for other goods. For instance, infrastructure investments increase the demand for construction services, such that overall employment may increase and trigger additional income and consumption as second-round effects. Thus, adaptation involves economic losers and beneficiaries within and across countries and regions. Quantifying the resulting net effect of these actions is the first of our research objectives. The second objective refers to the regional and financing dimension. The relative costs of adaptation vary strongly among and within economic sectors, regions and countries. In this paper, we focus on adaptation measures in the German federal state of Baden-Württemberg as an example of a small-open economy at subnational level. The impact of regional adaptation measures to a regional economy strongly depends on the way investments are financed. As climate change is a global problem and not all countries and regions exhibit required adaptation funds, the UN have launched a global adaptation fund in order to help sharing the financial burden (UNFCCC 2011). We are interested in analyzing and quantifying the difference, which that makes. To sum up, our analysis follows two research questions: 1) How do regional adaptation measures affect the sectoral structure of a small-open economy at subnational level and which trade and competitiveness effects arise? 2) What difference does a global adaptation fund make compared to region-specific financing at subnational level?

Shaping our energy system – combining European modelling expertise : Case studies of the European energy system in 2050