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Cumulative carbon emissions and economic policy: In search of general principles

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  • Dietz, Simon
  • Venmans, Frank

Abstract

We exploit recent advances in climate science to develop a physically consistent, yet surprisingly simple, model of climate policy. It seems that key economic models have greatly overestimated the delay between carbon emissions and warming, and ignored the saturation of carbon sinks that takes place when the atmospheric concentration of carbon dioxide rises. This has important implications for climate policy. If carbon emissions are abated, damages are avoided almost immediately. Therefore it is optimal to reduce emissions significantly in the near term and bring about a slow transition to optimal peak warming, even if optimal steady-state/peak warming is high. The optimal carbon price should start relatively high and grow relatively fast.

Suggested Citation

  • Dietz, Simon & Venmans, Frank, 2019. "Cumulative carbon emissions and economic policy: In search of general principles," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 108-129.
    • Handle: RePEc:eee:jeeman:v:96:y:2019:i:c:p:108-129
    DOI: 10.1016/j.jeem.2019.04.003
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    More about this item

    Keywords

    Carbon price; Climate change; Cumulative emissions; Peak warming; Social cost of carbon;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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