Adaptation and mitigation in long-term climate policies
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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| Date of creation: | 01 Oct 2010 |
| Date of revision: | |
| Handle: | RePEc:cor:louvco:2010065 |
| Contact details of provider: | Postal: Phone: 32(10)474321 Fax: +32 10474304 Web page: http://www.uclouvain.be/coreEmail: More information through EDIRC
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