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Adaptation, mitigation and risk: An analytic approach

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  • Zemel, Amos

Abstract

The adaptation vs. mitigation dilemma is considered by analyzing a simple dynamic model of managing a polluting process subject to the risk of abrupt occurrences of harmful events. The occurrence hazard can be mitigated by reducing the polluting emissions, while the occurrence damage can be controlled via investments in adaptation activities. A full dynamic characterization of the optimal mitigation/adaptation processes is presented. The adaptation and mitigation policies interact strongly, and the evolution in time of each is affected by the option to implement the other. The conditions under which adaptation investments should begin promptly, take place after some delay or be avoided altogether are derived in terms of some key model parameters.

Suggested Citation

  • Zemel, Amos, 2015. "Adaptation, mitigation and risk: An analytic approach," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 133-147.
    • Handle: RePEc:eee:dyncon:v:51:y:2015:i:c:p:133-147
    DOI: 10.1016/j.jedc.2014.10.001
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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