This paper deals with a relevant aspect of energy modeling, i.e. fossil fuels management. The issue is faced by using purely operational research techniques, which are suitable in this context. In particular, a dynamic stochastic optimization model is developed to optimally determine use and stock of resources to be employed in consumption and investments, in a wide economic sense: human and physical capital, R&D, etc. It is assumed that a sustainability criterion drives the optimality rules, i.e. decisions are also grounded on the well-being of future generations. The policymaker maximizes an aggregated intergen- erational expected utility under the dilemma of present consumption/conservation of natural resources for the future. In reference to standard environmental economic theory, jump-diffusion dynamics for the stock of natural resources and infinite time horizon are assumed. Extensive numerical experiments com- plete the analysis and contribute to determine fossil fuels management policies, showing that long-term investments make the difference for the well-being of present and future generations.

Sustainable management of fossil fuels. A dynamic stochastic optimization approach with jump-diffusion

CERQUETI, ROY;
2016-01-01

Abstract

This paper deals with a relevant aspect of energy modeling, i.e. fossil fuels management. The issue is faced by using purely operational research techniques, which are suitable in this context. In particular, a dynamic stochastic optimization model is developed to optimally determine use and stock of resources to be employed in consumption and investments, in a wide economic sense: human and physical capital, R&D, etc. It is assumed that a sustainability criterion drives the optimality rules, i.e. decisions are also grounded on the well-being of future generations. The policymaker maximizes an aggregated intergen- erational expected utility under the dilemma of present consumption/conservation of natural resources for the future. In reference to standard environmental economic theory, jump-diffusion dynamics for the stock of natural resources and infinite time horizon are assumed. Extensive numerical experiments com- plete the analysis and contribute to determine fossil fuels management policies, showing that long-term investments make the difference for the well-being of present and future generations.
2016
Elsevier
Internazionale
File in questo prodotto:
File Dimensione Formato  
Castellano_Sustainable-management-fossil_2016.pdf

solo utenti autorizzati

Tipologia: Documento in post-print (versione successiva alla peer review e accettata per la pubblicazione)
Licenza: DRM non definito
Dimensione 1.56 MB
Formato Adobe PDF
1.56 MB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11393/235087
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 4
  • ???jsp.display-item.citation.isi??? 4
social impact