Below the fold, I sketch the rational expectations view of how climate change adaptation unfolds in an economy populated with self interested, forward looking decision makers. Â If government invests in local public goods such as Sea Walls then firms and households will re-optimize accordingly. Â If you are interested in the “multiple equilibria” Â introduced by government choosing whether to build Sea Walls (and it is more likely to if it believes that more people will live in the at risk area) as a function of how many people live in the affected area (and more will if they expect that Sea Walls will be built) then read this paper.