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Energy Balance Climate Models and the Spatial Structure of Optimal Mitigation Policies AgEcon
Brock, William A.; Engstrom, Gustav; Xepapadeas, Anastasios.
We develop a one-dimensional energy balance climate model with heat transportation across locations. We introduce the concept of potential world GDP at time t, and we introduce, through the temperature function, spatial characteristics into the damage function which make damages latitude dependent. We solve the social planner’s problem and characterize the competitive equilibrium. We define optimal taxes on fossil fuels and profit taxes on firms that extract fossil fuels. Our results suggest that if the implementation of international transfers across latitudes is not possible, then optimal taxes are spatially non homogeneous and tend to be lower at the poor latitudes. The degree of spatial differentiation of optimal taxes depend on heat transportation. We...
Tipo: Working Paper Palavras-chave: Energy Balance Climate Models; Heat Diffusion; Temperature Distribution; Spatial Optimal Taxes; Environmental Economics and Policy; Q54; Q58.
Ano: 2012 URL: http://purl.umn.edu/121721
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Energy Balance Climate Models, Damage Reservoirs and the Time Profile of Climate Change Policy AgEcon
Brock, William A.; Engstrom, Gustav; Xepapadeas, Anastasios.
A simplified energy balance climate model is considered with the global mean temperature as the state variable, and an endogenous ice line. The movements of the ice line towards the Poles are associated with damage reservoirs where initial damages are high and then eventually vanish as the ice caps vanish and the damage reservoir is exhausted. We couple this climate model with a simple economic growth model and we show that the endogenous ice line induces a nonlinearity. This nonlinearity when combined with two sources of damages - the conventional damages due to temperature increase and the reservoir damages - generates multiple steady states and Skiba points. It is shown that the policy ramp implied by this model calls for high mitigation now. Simulation...
Tipo: Working Paper Palavras-chave: Energy Balance Climate Models; Damage Reservoir; Ice Line; Permafrost; Heat Diffusion; Policy Ramp; Skiba Points; Environmental Economics and Policy; Q54; Q58.
Ano: 2012 URL: http://purl.umn.edu/122863
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