Title:Climate Policy under Spatial Heat Transport: Cooperative and Noncooperative Regional Outcomes
Presenter:Cai Yongyang, the Ohio State University
TimeL2020.12.9,10:00-11:30
Location:zoom online
https://osu.zoom.us/j/92118113435?pwd=QzNITzNxb0NUUlIxSHJZY0lXQXdiZz09 >
Meeting ID: 921 1811 3435
Password: 748457
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 policy optimization 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 noncooperation between two regions (the North and the Tropic-South) in the face of risks and recursive utility. We introduce a new general computational algorithm to find feedback Nash equilibrium. Our results suggest that when the elements of climate science are ignored, important policy variables such as the optimal regional carbon tax and adaptation could be seriously biased. We also find the regional carbon tax is significantly smaller in the feedback Nash equilibrium than in the social planner’s problem in each region, and the North has higher carbon taxes than the Tropic-South.
