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Adaptation and mitigation in long-term climate policies

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Listed author(s):
  • Brechet, Thierry

    ()

    (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium)

  • HRITONENKO, Natali

    ()

    (Department of Mathematics, Prairie View A&M University, Texas, USA)

  • YATSENKO, Yuri

    ()

    (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium; School of Business, Houston Baptist University, Texas, USA)

Abstract

The paper analytically explores the optimal policy mix between mitigation and environmental adaptation against climate change at a macroeconomic level. The constructed economic- environmental model is formulated as a social planner problem with the adaptation and abatement investments as separate decision variables. The authors prove the existence of a unique steady state and provide a comparative static analysis of the optimal investment. It leads to essential implications for associated long-term environmental policies. In particular, the dependence of the optimal ratio between abatement and adaptation investments on economic efficiency appears to have an inverted U-shape. Data calibration and numerical simulation are provided to illustrate theoretical outcomes.

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File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2010_65web.pdf
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010065.

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Date of creation: 01 Oct 2010
Handle: RePEc:cor:louvco:2010065
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Keywords: environmental adaptation; mitigation; optimal investment; long-term climate policies;

This paper has been announced in the following NEP Reports:

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  1. Bovenberg, A Lans & Smulders, Sjak A, 1996. "Transitional Impacts of Environmental Policy in an Endogenous Growth Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 861-893, November.
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  6. Zmarak Shalizi & Franck Lecocq, 2010. "To Mitigate or to Adapt: Is that the Question? Observations on an Appropriate Response to the Climate Change Challenge to Development Strategies," World Bank Research Observer, World Bank Group, vol. 25(2), pages 295-321, August.
  7. Wagener, F.O.O., 2004. "Skiba points for small discount rates," CeNDEF Working Papers 04-09, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  8. Kelly C. de Bruin & Rob B. Dellink & Richard S.J. Tol, 2007. "AD-DICE: an implementation of adaptation in the DICE model," Working Papers FNU-126, Research unit Sustainability and Global Change, Hamburg University, revised Feb 2007.
  9. Lans Bovenberg, A. & Smulders, Sjak, 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Journal of Public Economics, Elsevier, vol. 57(3), pages 369-391, July.
  10. Raymond Gradus & Sjak Smulders, 1993. "The trade-off between environmental care and long-term growth—Pollution in three prototype growth models," Journal of Economics, Springer, vol. 58(1), pages 25-51, February.
  11. George Economides & Apostolis Philippopoulos, 2008. "Growth enhancing policy is the means to sustain the environment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 207-219, January.
  12. Toman, Michael A. & Withagen, Cees, 2000. "Accumulative pollution, "clean technology," and policy design," Resource and Energy Economics, Elsevier, vol. 22(4), pages 367-384, October.
  13. Thomas F. Cosimano, 2003. "Optimal Experimentation and the Perturbation Method," Computing in Economics and Finance 2003 71, Society for Computational Economics.
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Cited by:

  1. Hassan Benchekroun & Farnaz Taherkhani, 2014. "Adaptation and the Allocation of Pollution Reduction Costs," Dynamic Games and Applications, Springer, vol. 4(1), pages 32-57, March.
  2. Martin Farnham & Peter Kennedy, 2015. "Adapting to Climate Change: Equilibrium Welfare Implications for Large and Small Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(3), pages 345-363, July.
  3. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Fundamental questions on the economics of climate adaptation: Outlines of a new research programme," UFZ Reports 05/2012, Helmholtz Centre for Environmental Research (UFZ).
  4. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Ökonomische Grundfragen der Klimaanpassung: Umrisse eines neuen Forschungsprogramms," UFZ Reports 02/2012, Helmholtz Centre for Environmental Research (UFZ).
  5. HRITONENKO, Natali & YATSENKO, Yuri, 2011. "Sustainable growth and modernization under environmental hazard and adaptation," CORE Discussion Papers 2011025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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