This paper analyses empirically the optimal climate change mitigation policy of Malaysia with the business as usual scenario of ASEAN to compare their environmental and economic consequences over the period 2010-2110. A downscaling empirical dynamic model is constructed using a dual multidisciplinary framework combining economic, earth science, and ecological variables to analyse the long-run consequences. The model takes account of climatic variables, including carbon cycle, carbon emission, climatic damage, carbon control, carbon concentration, and temperature. The results indicate that without optimal climate policy and action, the cumulative cost of climate damage for Malaysia and ASEAN as a whole over the period 2010-2110 would be MYR40.1 trillion and MYR151.0 trillion, respectively. Under the optimal policy, the cumulative cost of climatic damage for Malaysia would fall to MYR5.3 trillion over the 100 years. Also, the additional economic output of Malaysia will rise from MYR2.1 billion in 2010 to MYR3.6 billion in 2050 and MYR5.5 billion in 2110 under the optimal climate change mitigation scenario. The additional economic output for ASEAN would fall from MYR8.1 billion in 2010 to MYR3.2 billion in 2050 before rising again slightly to MYR4.7 billion in 2110 in the business as usual ASEAN scenario.
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