Financing Climate Change Policies: A Multi-Phase Integrated Assessment Model for Mitigation and Adaptation

38 Pages Posted: 6 Jun 2019

See all articles by Willi Semmler

Willi Semmler

The New School - Department of Economics; Universitaet Bielefeld; IIASA

Helmut Maurer

University of Muenster

Tony Bonen

Labour Market Information Council (LMIC)

Date Written: December 9, 2018

Abstract

We present an extended integrated assessment model (IAM) that optimizes climate financing policies over multiple phases of discrete policy action. We build on Semmler et al. (2018) which develops a single-phase model of the optimal allocation of infrastructure expenditure to carbon-neutral physical capital, climate change adaptation, and emissions mitigation. That model is solved via the nonlinear programming method AMPL. A new algorithm, the arc-parameterization method (APM), allows us to extend the model to multiple regimes, operationalized through a 3-phase policy policy environment. The first policy regime is defined by a limited set of policy tools. In the second regime, green bonds (i.e., climate-focused financing) are introduced, and increase the use of mitigation and adaptation policies. In the final regime, green bonds are repaid with a new tax. We demonstrate that this multi-phase model incorporating climate, fiscal and financial policies is Pareto superior to single-phase models.

Keywords: Climate Change, Multi-phase Fiscal and Financial Policies, IAM with Optimal Control, Environmental Economics

JEL Classification: C61, Q54, Q58, H5

Suggested Citation

Semmler, Willi and Maurer, Helmut and Bonen, Tony, Financing Climate Change Policies: A Multi-Phase Integrated Assessment Model for Mitigation and Adaptation (December 9, 2018). Available at SSRN: https://ssrn.com/abstract=3298323 or http://dx.doi.org/10.2139/ssrn.3298323

Willi Semmler

The New School - Department of Economics ( email )

65 Fifth Avenue
New York, NY 10003
United States

HOME PAGE: http://www.newschool.edu/nssr/faculty/?id=4e54-6b79-4e41-3d3d

Universitaet Bielefeld ( email )

Universit├Ątsstra├če 25
Bielefeld, NRW
Germany

IIASA ( email )

Schlossplatz 1
Laxenburg/Austria, A-2361
Austria

Helmut Maurer

University of Muenster

Schlossplatz 2
Muenster, D-48149
Germany

Tony Bonen (Contact Author)

Labour Market Information Council (LMIC) ( email )

410 Laurier Avenue West
suite 410
Ottawa, Ontario K1R 1B7
Canada

HOME PAGE: http://lmic-cimt.ca/

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