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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 dont 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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- Fall '08