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Economics of Climate ChangeMitigation
HeartlandJune 2011Robert Mendelsohn
 
Mitigation Theory- Nordhaus
•Minimize present value of sum of mitigation costs plus climate damages•Equate marginal cost of mitigation topresent value of the stream of netmarginal damages (benefits)•Optimal mitigation depends on size of impacts and cost of abatement•Because impacts grow, marginal costsshould rise over time- dynamic policy
 
Efficient Mitigation
•Every source abates to same level of marginal cost (price) in every sector inevery country•Requires universal participation•If only half of emission sources participate,costs double
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