NOTES

1. Some of the assumptions specific to the DICE model were challenged immediately, for instance the choice and sensitivity of the model to the assumed discount rate to which the model results are highly sensitive (Cline 1992), the uniform treatment of losses of tangible and intangible goods via the flexible production function, as opposed to a more rigid utility function (Tol 1994) and a lack of source and sink constraints on carbon and the assumed linearity of the carbon uptake processes and instantaneous flexibility of emissions (Frankhauser 1995).

2. The peculiar phenomenon of sub-par mortgages for home buyers with poor credit is a direct consequence of Bush Administration policy. The sub-par mortgage lenders count on either raising their rates after a few years, or foreclosing and selling appreciated properties into a rising real-estate market. Declining house prices are disastrous both for the borrowers and the lenders, many of which went bankrupt in 2007-08.

3. The best source on all this is Strahan (2007). For the geological background see Campbell (1997), Campbell and Laherrere (1998), Campbell (2003) and Deffeyes (2001).

4. The outcome of the famous debate (and bet) between Julian Simon and Paul Ehrlich (and two colleagues) seems to confirm the optimists. However, this optimism about future costs and prices is really predicated on three other extrapolations, namely that the historical rate of technical progress in discovery and conversion will continue to outstrip the rate of decline in ore quality and the rate of increase of demand. The underlying economic theory has been set forth in detail in the book Scarcity and Growth by Barnett and Morse (1963), subsequently updated (Smith and Krutilla 1979).

5. Despite recent publicity, permeable membrane hydrogen fuel cells are unlikely to be used widely for private automobiles due to high costs and better uses for the natural gas or electric power used to produce the hydrogen (Romm 2004).

6. The actual procedure is to fit a straight line through the logarithms.

7. We used parameter values for REXSH, identified through empirical analysis of historical data (Ayres et al. 2003).

8. A more elaborate alternative could employ a punctuated-equilibrium model of technology adoption and diffusion, capable of modeling competing technologies (Loch and Huberman 1999). In the perspective of evolutionary economics, it might be appropriate to model efficiency as a birth and death process for Schumpeterian innovations. This formulation could also be considered a 'learning and forgetting' model (Benkard 1999). It is reasonable to consider the efficiency improvements as resulting from the birth of new technologies and the loss of memory of previous ones. Of course, this is a very simplistic interpretation, inasmuch as existing ideas are often incorporated into their successors.

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