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The zero discounting and maximin optimal paths in a simple model of global warming

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  • d'Autume, Antoine
  • Hartwick, John M.
  • Schubert, Katheline

Abstract

Following Stollery (1998), we extend the Solow-Dasgupta-Heal model to analyze the effects of global warming. The rise in temperature is caused by the use of fossil resources so that the temperature level can be linked to the remaining stock of these resources. The rise in temperature affects both productivity and utility. We characterize optimal solutions for the maximin and zero discounting cases and present closed-form solutions for the case where the production and utility functions are Cobb-Douglas, and the temperature level is an exponential function of the remaining stock of resources. We show that a greater weight on temperature in intratemporal preferences and a larger intertemporal elasticity of substitution both lead to postponing resource use.

Suggested Citation

  • d'Autume, Antoine & Hartwick, John M. & Schubert, Katheline, 2010. "The zero discounting and maximin optimal paths in a simple model of global warming," Mathematical Social Sciences, Elsevier, vol. 59(2), pages 193-207, March.
    • Handle: RePEc:eee:matsoc:v:59:y:2010:i:2:p:193-207
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    1. Antoine d’Autume & Katheline Schubert, 2008. "Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value," Revue d'économie politique, Dalloz, vol. 118(6), pages 827-845.
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    5. d'Autume, Antoine & Schubert, Katheline, 2008. "Hartwick's rule and maximin paths when the exhaustible resource has an amenity value," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 260-274, November.
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    2. Cairns, Robert D. & Del Campo, Stellio & Martinet, Vincent, 2019. "Sustainability of an economy relying on two reproducible assets," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 145-160.
    3. John M. Hartwick & Ngo Van Long, 2020. "Sustainability with endogenous discounting," International Journal of Economic Theory, The International Society for Economic Theory, vol. 16(2), pages 216-221, June.
    4. Bazhanov, Andrei V., 2015. "Inefficiency and sustainability," Resources Policy, Elsevier, vol. 45(C), pages 210-216.
    5. Martinet, Vincent & Del Campo, Stellio & Cairns, Robert D., 2022. "Intragenerational inequality aversion and intergenerational equity," European Economic Review, Elsevier, vol. 144(C).
    6. Van Long, Ngo, 2016. "The Impacts of Other-Regarding Preferences and Ethical Choice on Environmental Outcomes: A Review of the Literature," Strategic Behavior and the Environment, now publishers, vol. 6(1-2), pages 1-35, December.
    7. Ngo Van Long & Vincent Martinet, 2016. "How to Take Rights Seriously: A New Approach to the Intertemporal Evaluation of Social Alternatives," CIRANO Working Papers 2016s-60, CIRANO.
    8. Daniel Grainger, 2023. "Sustainability criterion implied externality pricing for resource extraction," Papers 2306.04065, arXiv.org.
    9. Grainger, Daniel, 2024. "Sustainability criterion implied externality pricing for resource extraction," Economics Letters, Elsevier, vol. 234(C).
    10. Hartwick, John M. & Long, Ngo Van, 2018. "Sustainability with endogenous discounting when utility depends on consumption and amenities," Mathematical Social Sciences, Elsevier, vol. 95(C), pages 31-36.

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    More about this item

    Keywords

    Polluting exhaustible resources Global warming Maximin Zero discounting Sustainability;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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