Non-smooth climate change and emergent novel equilibria in an environmental-economic system

In this paper we study a basic model of economic growth where we integrate a zero-dimensional energy balance model of the earth. The albedo of the earth, which determines the share of reflected sunlight, is a piecewise smooth function of the average surface temperature. Thus, we take into account possible feedback effects of a higher temperature. The analysis of the model shows that the model with a jump in the albedo has either a unique regular steady-state or two regular steady-states. When the albedo is described by a piecewise linear function there exists a non-degenerate pseudo-equilibrium where the temperature stabilizes at the upper switching point of the albedo with a strictly positive level of consumption.