Adaptive Model-Predictive Climate Policies in a Multi-Country Setting

The purpose of this paper is to extend the use of integrated assessment models by defining rational policies based on predictive control and adaptive behavior. The paper begins with an review of the main IAMs and their use. Then the concept of Model Predictive Nash Equilibrium (MPNE) is introduced within a general model involving heterogeneous economic agents operating in (and interfering with) a common environment. This concept captures the fact that agents do not have a perfect foresight for several ingredients of the model, including that of the environment. A version of the canonical IAM (DICE) is developed as a benchmark case. The concept of MPNE is then enhanced with adaptive learning about the environmental dynamics and the damages caused by global warming. The approach is illustrated by some numerical experiments in a two-region setting for several scenarios.

[1]  Dimitri Paolini,et al.  MANAGEMENT EFFICIENCY IN FOOTBALL: AN EMPIRICAL ANALYSIS OF TWO EXTREME CASES , 2015 .

[2]  Vladimir M. Veliov,et al.  Model predictive control, the economy, and the issue of global warming , 2014, Ann. Oper. Res..

[3]  C. d'Aspremont,et al.  Household behavior and individual autonomy: an extended Lindahl mechanism , 2014 .

[4]  Erik Schokkaert,et al.  Arrow’s theorem of the deductible: Moral hazard and stop-loss in health insurance , 2013 .

[5]  Pierre Dehez,et al.  HOW TO SHARE JOINT LIABILITY: A COOPERATIVE GAME APPROACH , 2012, Math. Soc. Sci..

[6]  P. Picard,et al.  State Owned Firms: Private Debt, Cost Revelation and Welfare , 2012 .

[7]  Michel Mouchart,et al.  A stochastic independence approach for different measures of concentration and specialization , 2012 .

[8]  François Maniquet,et al.  Equality Of Opportunity: The Economics Of Responsibility , 2012 .

[9]  Pierre Pestieau,et al.  Long-Term Care Insurance and Family Norms , 2012 .

[10]  Tom Truyts,et al.  Stochastic Signaling: Information Substitutes and Complements , 2012 .

[11]  Thierry Bréchet,et al.  Coalition theory and integrated assessment modeling: lessons for climate governance , 2012 .

[12]  U. Barcelona,et al.  Empirical Approaches to Inequality of Opportunity: Principles, Measures, and Evidence , 2012, SSRN Electronic Journal.

[13]  Thierry Bréchet,et al.  The Clean Development Mechanism in a Global Carbon Market , 2012 .

[14]  T. Mayer,et al.  The Economics of Clusters: Lessons from the French Experience , 2011 .

[15]  L. Grüne,et al.  Nonlinear Model Predictive Control : Theory and Algorithms. 2nd Edition , 2011 .

[16]  Thierry Bréchet,et al.  Efficiency vs. Stability in Climate Coalitions: A Conceptual and Computational Appraisal , 2011 .

[17]  F. Ackerman,et al.  Inside the integrated assessment models: Four issues in climate economics , 2009 .

[18]  W. Semmler.  WP 2009-7 Growth and Climate Change: Threshold and Multiple Equilibria , 2009 .

[19]  Zili Yang.  Strategic Bargaining and Cooperation in Greenhouse Gas Mitigations: An Integrated Assessment Modeling Approach , 2008 .

[20]  M. Weitzman.  A Review of The Stern Review on the Economics of Climate Change , 2007 .

[21]  Thierry Bréchet,et al.  Climate Coalitions: A Theoretical and Computational Appraisal , 2007 .

[22]  N. Stern.  The Economics of Climate Change: Implications of Climate Change for Development , 2007 .

[23]  M. Tavoni,et al.  A World Induced Technical Change Hybrid Model , 2006 .

[24]  Valentina Bosetti,et al.  A World induced Technical Change Hybrid Model , 2006 .

[25]  S. Mourato,et al.  Cost-Benefit Analysis and the Environment: Recent Developments , 2006 .

[26]  Elmar Kriegler,et al.  The impact of technological change on climate protection and welfare: Insights from the model MIND , 2005 .

[27]  Maryse Labriet,et al.  The World-Markal Model and Its Application to Cost-Effectiveness, Permit Sharing, and Cost-Benefit Analyses , 2005 .

[28]  Alan S. Manne,et al.  Merge: An Integrated Assessment Model for Global Climate Change , 2005 .

[29]  Johan Eyckmans,et al.  Simulating Coalitionally Stable Burden Sharing Agreements for the Climate Change Problem , 2001 .

[30]  Andrew A. Samwick.  Discount Rate Heterogeneity and Social Security Reform , 1997 .

[31]  William D. Nordhaus,et al.  A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies , 1996 .

[32]  A. Meyer.  Economics Of Climate Change , 1995, Nature.

[33]  John P. Weyant,et al.  Model comparisons of the costs of reducing CO2 emissions , 1993 .

[34]  William D. Nordhaus,et al.  Rolling the ‘DICE’: an optimal transition path for controlling greenhouse gases , 1993 .

[35]  William D. Nordhaus,et al.  Optimal Greenhouse-Gas Reductions and Tax Policy in the "Dice" Model , 1993 .

[36]  W. Nordhaus.  An Optimal Transition Path for Controlling Greenhouse Gases , 1992, Science.

[37]  Stelios Kafandaris,et al.  Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits , 1992 .

[38]  M. Benarie.  IMAGE: An integrated model to assess the greenhouse effect: by J. Rotmans, Kluwer Academic Publishers, Dordrecht, The Netherlands 1990, 289 pp. Price: Dfl. 179.00, US$ 111.00 , 1992 .

[39]  A. Manne,et al.  Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits , 1992 .

[40]  Emily C Lawrance.  Poverty and the Rate of Time Preference: Evidence from Panel Data , 1991, Journal of Political Economy.

[41]  Jan Rotmans,et al.  Image: An Integrated Model to Assess the Greenhouse Effect , 1990 .

[42]  William D. Nordhaus,et al.  CO2 Forecasting and Control: A Mathematical Programming Approach , 1984 .

[43]  W. Nordhaus.  Economic Growth and Climate: The Carbon Dioxide Problem , 1976 .

[44]  E. Keeler,et al.  The optimal control of pollution , 1972 .