The effects of political short-termism on transitions induced by pollution regulations

Giovanni Di Bartolomeo (), Enrico Saltari and Semmler Willi

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Abstract: We study the dynamic problem of pollution control enacted by some policies of regulation and mitigation. The transition dynamics from one level of regulation and mitigation to another usually involve inter-temporal trade-offs. We focus on how different policymaker’s time horizons affect these trade-offs. We refer to shorter lengths in policymaker’s time horizons as political short-termism or inattention, which is associated with political econ-omy or information constraints. Formally, inattention is modeled by using Nonlinear Model Predictive Control. Therefore, it is a dynamic concept: our policymakers solve an inter-temporal decision problem with a finite horizon that involves the repetitive solution of an optimal control problem at each sampling instant in a receding horizon fashion. We find that political short-termism substantially affects the transition dynamics. It leads to quicker but costlier transitions. It also leads to an under-evaluation of the environmental costs that may accelerate climate change.

Date: 2022-11
New Economics Papers: this item is included in nep-ene, nep-env and nep-pol
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Related works:
Working Paper: The effects of political short-termism on transitions induced by pollution regulations (2022)
Working Paper: The effects of political short-termism on transitions induced by pollution regulations (2019)
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