An Economic Anatomy of Optimal Climate Policy

Juan Moreno-Cruz, Gernot Wagner and David w. Keith
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David w. Keith: Harvard University

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: This paper introduces geoengineering into an optimal control model of climate change economics. Together with mitigation and adaptation, carbon and solar geoengineering span the universe of possible climate policies. We show in the context of our model that: (i) a carbon tax is the optimal response to the unpriced carbon externality only if it equals the marginal cost of carbon geoengineering; (ii) the introduction of solar geoengineering leads to higher emissions yet lower tempera- tures, and, thus, increased welfare; and (iii) solar geoengineering,in effect, is a public goods version of adaptation that also lowers temperatures.

JEL-codes: D90 O44 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-res
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Citations: View citations in EconPapers (2)

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Working Paper: An Economic Anatomy of Optimal Climate Policy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp17-028

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