Four essays in environmental economics on carbon management and invasive species control

This thesis devotes three essays to the economics of global warming. The first examines the optimal allocation between carbon sequestration and conventional abatement. The problem is approached as a dynamic optimization problem. A conceptual model that captures the benefits and costs of carbon emissions, sequestration and climate change is developed and used to examine characteristics of an optimal solution. In addition, the model is used to design a carbon trading mechanism that allows for pollution emitting firms to offset their emissions by buying carbon sequestered through afforestation projects. A key contribution to the literature on carbon trading will be attention to the time consistency of the trading rules. A policy is time consistent when there is no incentive for future generations to deviate from the planned path. Finally, simulation experiments are conducted to study the effect of key parameters of the model on decision rules and thus guide policy making.; The first essay serves as a benchmark for exploring the implication of uncertainty in that I develop the case of perfect information. The second essay begins my analysis of risk. Specifically, in this essay I modify the model developed in chapter one to explore the implications of uncertain events for optimal plans and design of mechanisms. Special attention is devoted to the possibilities of catastrophes and pollution-eliminating discoveries through the second essay.; The third essay also builds up on the first to explore risks that are peculiar to the sequestration process. These arise due the unobservability of sequestered carbon and stochastic flux associated with atmospheric parameters. Such a holistic treatment of uncertainty would help contribute towards understanding of the nature of uncertainties and their impact on the choice of appropriate tools.; The fourth essay is devoted to the invasive species management problem. The introduction of species to non-native environments is the largest source of ecosystem change and biodiversity loss worldwide after habitat destruction. The economic impacts, in terms of diminished amenities and resources and associated commercial and recreational opportunities, capital modifications and maintenance requirements, and potential health impacts can be enormous. For example, one estimate puts the damages in the US alone to be {dollar}122,639 million per year from all invasive species. (Abstract shortened by UMI.)...