A stochastic control model is proposed as a paradigm for the design of optimal timing of greenhouse gases (GHG) emissions abatement. The resolution of uncertainty concerning climate sensitivity and the technological breakthrough providing access to a carbon-free production economy are modeled as controlled stochastic jump processes. The optimal policy is characterized using the dynamic programming solution to a piecewise deterministic optimal control problem. A numerical illustration is developed with a set of parameters calibrated on recently proposed models for integrated assessment of climate policies. The results are interpreted and the insights they provide on the timing issue of climate policy are discussed.
Published July 2007 , 28 pages
This cahier was revised in January 2008