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Unformatted text preview: max abatement – actual abatement – decay ← ← Emerging countries : focus on economy before environment, which is a mistake - stock pollutants build up. But investing now leads to r ↑ , higher discount for pollutants later (cheaper)! Ideally, invest in a environment fund. ← ← Stock will increase until S’=(A’-A)-gS=0 (ie. reach steady state) ← Marginal units of abatement gets more expensive @ increasing rate ← ← MC of fossil fuels (CO 2 emission) is extremely steep because we don’t know how to reduce it ← Renewable energy must be on large scale ← MC ( S t ) = MD ( S t ) + MC '( S t ) r + l where MC’(S t ) is negligibly small ← Better to abate later: ← Cheaper technology ← Discount rate: value of $ ↑ , cheaper costs ← ← ← 26/01/2010 20:14:00 ← 26/01/2010 20:14:00 ←...
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This note was uploaded on 01/26/2010 for the course ECON 330 taught by Professor Robertmendelsohn during the Fall '08 term at Yale.
- Fall '08