Nahid Masoudi, University of Manitoba

Fri. Jan. 31 02:30 PM - Fri. Jan. 31 04:00 PM
Location: 4BC55

"Hope for Tomorrow, Emissions Today: The Impact of Technological Breakthrough Expectations on Climate Policy"

Abstract: In this paper, we investigate how the anticipation of future technological breakthroughs in adaptation impacts emissions and investment strategies in a strategic setting. We find that the prospect of a breakthrough technology, which lowers environmental damages, leads countries to emit more in the present, resulting in a higher steady-state pollution stock compared to scenarios without such expectations. Additionally, the increased likelihood of achieving a breakthrough further accelerates emissions and pollution accumulation. These results suggest that optimism for future technology, while valuable, may paradoxically exacerbate environmental degradation if not managed within a balanced policy framework. The model with asymmetric probabilities reveals that countries with a higher likelihood of achieving breakthrough technologies emit more in anticipation of future adaptive capacity, while others compensate with reduced emissions. This dynamic underscores the importance of international collaboration to address disparities in technological advancement and mitigate global coordination challenges.