Energy Balance Climate Models, Damage Reservoirs and the Time Profile of Climate Change Policy

William A. Brock, Gustav Engstrom and Anastasios Xepapadeas ()
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Gustav Engstrom: Beijer Institute of Ecological Economics

No 2012.20, Working Papers from Fondazione Eni Enrico Mattei

Abstract: A simplified energy balance climate model is considered with the global mean temperature as the state variable, and an endogenous ice line. The movements of the ice line towards the Poles are associated with damage reservoirs where initial damages are high and then eventually vanish as the ice caps vanish and the damage reservoir is exhausted. We couple this climate model with a simple economic growth model and we show that the endogenous ice line induces a nonlinearity. This nonlinearity when combined with two sources of damages - the conventional damages due to temperature increase and the reservoir damages - generates multiple steady states and Skiba points. It is shown that the policy ramp implied by this model calls for high mitigation now. Simulation results suggest that the policy ramp could be U-shaped instead of the monotonically increasing with low starting mitigation gradualist policy ramp.

Keywords: Energy Balance Climate Models; Damage Reservoir; Ice Line; Permafrost; Heat Diffusion; Policy Ramp; Skiba Points (search for similar items in EconPapers)
JEL-codes: Q54 Q58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-env
Date: 2012-03
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