Abstract
This paper studies two questions which arise when atmospheric CO2 accumulation is viewed as a long-term planning problem. Several authors have proposed that the level of adaptation costs may depend on the rate of temperature change rather than on the temperature level. The analysis shows that this feature changes considerably the dynamic efficiency properties of optimal emission abatement. Contrary to the usual results, lower rates of discount may lead to higher emissions. If adaptation costs depend on the rate of temperature change, future generations may prefer a higher, rather than a lower, temperature. Another specification in the paper avoids the difficult issue of adaptation costs by assuming that it is possible to specify some target equilibrium temperature to be reached within the next hundred years. The economic problem is to reach this target state with minimum abatement costs. Simulation suggest that the optimal trajectory overshoots the terminal target only for very low target temperature levels.
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© 1995 Confederation of European Economic Associations
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Tahvonen, O., von Storch, H., Xu, J. (1995). Atmospheric CO2 Accumulation and Problems in Emission Abatement. In: Boero, G., Silberston, A. (eds) Environmental Economics. Confederation of European Economic Associations. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-23989-4_11
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DOI: https://doi.org/10.1007/978-1-349-23989-4_11
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