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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/55356
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| Title: | | Regime shifts and uncertainty in pollution control  |
| Authors: | | de Zeeuw, Aart Zemel, Amos |
| Issue Date: | | 2012 |
| Series/Report no.: | | CESifo working paper: Energy and Climate Economics 3697 |
| Abstract: | | We develop a simple model of managing a system subject to pollution damage under risk of an abrupt and random jump in the damage coefficient. The model allows the full dynamic characterization of the optimal emission policies under uncertainty. The results, that imply prudent behavior due to uncertainty, are compared with the ambiguous outcomes reported in the literature for similar models. The differences are explained in terms of the properties of the damage function associated with each model. The framework is used to analyze the adaptation vs. mitigation dilemma and provides a simple criterion to determine whether adaptation activities should be undertaken promptly, delayed to some future date, or avoided altogether. |
| Subjects: | | environmental pollution optimal management catastrophic transitions uncertainty adaptation mitigation |
| JEL: | | Q28 Q52 Q54 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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