Thinking About Carbon Dioxide: Theoretical and Empirical Aspects of Optimal Control Strategies

The scientific and policy discussion about the CO2 problem can be divided into three different parts: (a) understanding the carbon cycle and climatic effects of CO2 elevation; (b) understanding the economic and social impacts of CO2 and estimating abatement strategies; and (c) weighing the costs and benefits in (a) and (b) to set appropriate policies. Up to now, almost all scientific work has gone into (a); a handful of papers discusses (b); but there have been no attempts to pursue (c), that is to weigh scientific and economic evidence so as to give guidance on national or global policies. The present study attempts to use the basic principles of growth economics to start a discussion of policy responses to the CO2 problem.