Adaptation Mitigation: What is the Optimal Climate Change Policy Mix?

30 Pages Posted: 7 Apr 2011

See all articles by Werner Antweiler

Werner Antweiler

University of British Columbia (UBC) - Sauder School of Business

Date Written: April 4, 2011

Abstract

In dealing with climate change, how much should governments focus their effort on mitigation (emission reduction to prevent climate change) and on adaptation (coping with a changed climate)? Very little research has gone into pinning down which strategy is dynamically optimal under what kind of conditions. This paper contributes to this debate by developing a parsimonious optimal control model that focuses on the non-linearity of climate change and the presence of multiple countries. Calibrated simulation results are provided to characterize the model. The results show that the optimal policy mix – or the adoption decision for mitigation and adaptation – is determined by two key parameters: an adjusted mitigation/adaptation cost ratio and the climate change damage elasticity. The latter depends crucially on the non-linearity (suddenness) of climate change. Country heterogeneity influences the policy choice strongly in favour of adaptation.

Keywords: climate change, optimal control theory

JEL Classification: Q54

Suggested Citation

Antweiler, Werner, Adaptation Mitigation: What is the Optimal Climate Change Policy Mix? (April 4, 2011). Available at SSRN: https://ssrn.com/abstract=1802857 or http://dx.doi.org/10.2139/ssrn.1802857

Werner Antweiler (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

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