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Modeling of Environmental Adaptation versus Pollution Mitigation

Published online by Cambridge University Press:  20 June 2014

Y. Yatsenko*
Affiliation:
School of Business, Houston Baptist University, 7502 Fondren, Houston, Texas 77074, USA
N. Hritonenko
Affiliation:
Department of Mathematics, Prairie View A&M University, Prairie View, Texas 77446, USA
T. Bréchet
Affiliation:
Université catholique de Louvain, CORE and Louvain School of Management, Belgium
*
Corresponding author. E-mail: [email protected]
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Abstract

The paper combines analytic and numeric tools to investigate a nonlinear optimal control problem relevant to the economics of climate change. The problem describes optimal investments into pollution mitigation and environmental adaptation at a macroeconomic level. The steady-state analysis of this problem focuses on the optimal ratio between adaptation and mitigation. In particular, we analytically prove that the long-term investments into adaptation are profitable only for economies above certain efficiency threshold. Numerical simulation is provided to estimate how the economic efficiency and capital deterioration affect the optimal policy.

Type
Research Article
Copyright
© EDP Sciences, 2014

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