Adaptation, mitigation and risk: An analytic approach

Amos Zemel

Journal of Economic Dynamics and Control, 2015, vol. 51, issue C, 133-147

Abstract: The adaptation vs. mitigation dilemma is considered by analyzing a simple dynamic model of managing a polluting process subject to the risk of abrupt occurrences of harmful events. The occurrence hazard can be mitigated by reducing the polluting emissions, while the occurrence damage can be controlled via investments in adaptation activities. A full dynamic characterization of the optimal mitigation/adaptation processes is presented. The adaptation and mitigation policies interact strongly, and the evolution in time of each is affected by the option to implement the other. The conditions under which adaptation investments should begin promptly, take place after some delay or be avoided altogether are derived in terms of some key model parameters.

Keywords: Optimal management; Abrupt damage; Occurrence hazard; Adaptation; Mitigation (search for similar items in EconPapers)
JEL-codes: C61 Q52 Q54 Q58 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:51:y:2015:i:c:p:133-147

DOI: 10.1016/j.jedc.2014.10.001

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