Title | ||
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The consequences of irreversibility on optimal intertemporal emission policies under uncertainty. |
Abstract | ||
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This paper investigates how irreversibility affects optimal intertemporal emission policies when negative stock externalities
exist. In particular it discusses the effect of irreversible emission, i.e., it concerns the physical issue whether it is
possible to recollect pollutants that have been emitted or not. We depict our analysis with the greenhouse effect as a topical
example and model the uncertainty with respect to the future evolution of the world’s temperature (i.e., the uncertain factor
that determines the costs) as It-process with the drift provided by current carbon-dioxide emissions. We show analytically
that irreversibility affects the optimal emission policy only if the future impact of today’s emissions is uncertain. Under
uncertainty, irreversibility leads to a conservationist policy such that emissions are reduced at any level of environmental
concentration of the pollutant. The level where stopping emissions is optimal decreases in the presence of irreversibility.
Furthermore, the expected duration of fossil fuel use is derived. A numerical example which is calibrated to roughly reflect
the global CO2 problem illustrates the analytical findings. |
Year | DOI | Venue |
---|---|---|
2007 | 10.1007/s10100-007-0023-1 | CEJOR |
Keywords | Field | DocType |
Optimal taxation,Optimal resource allocation,Q48,D81,C61 | Public economics,Economics,Mathematical optimization,Natural resource economics,Greenhouse effect,Fossil fuel,Externality | Journal |
Volume | Issue | ISSN |
15 | 2 | 1435-246X |
Citations | PageRank | References |
0 | 0.34 | 0 |
Authors | ||
2 |
Name | Order | Citations | PageRank |
---|---|---|---|
Thomas Dangl | 1 | 43 | 8.57 |
Franz Wirl | 2 | 10 | 5.31 |