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Climate Policy under Cooperation and Competition between Regions with Spatial Heat Transport

Yongyang Cai (), William Brock, Anastasios Xepapadeas () and Kenneth Judd ()
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Kenneth Judd: Hoover Institution

No 1806, DEOS Working Papers from Athens University of Economics and Business

Abstract: We build a novel stochastic dynamic regional integrated assessment model (IAM) of the climate and economic system including a number of important climate science elements that are missing in most IAMs. These elements are spatial heat transport from the Equator to the Poles, sea level rise, permafrost thaw and tipping points. We study optimal policies under cooperation and various degrees of competition between regions. Our results suggest that when the elements of climate science which are accounted for in this paper are ignored, important policy variables such as the social cost of carbon and adaptation could be seriously biased.

Keywords: Integrated Assessment Model; spatial heat transport; social cost of carbon; carbon taxes; adaptation; sea level rise; permafrost; stochastic tipping points; Epstein-Zin preferences (search for similar items in EconPapers)
JEL-codes: Q54 Q58 C61 C63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
Date: 2018-03-26
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Working Paper: Climate Policy under Cooperation and Competition between Regions with Spatial Heat Transport (2018) Downloads
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