We consider a simplified version of the Budyko diffusive energy balance climate model. We obtain the exact number of monotone stationary solutions of the associated discontinuous nonlinear elliptic with absorption. We show that the bifurcation curve, in terms of the solar constant parameter, is S-shaped. We prove the instability of the decreasing part and the stability of the increasing part of the bifurcation curve. In terms of the Budyko climate problem the above results lead to an important qualitative information which is far to be evident and which seems to be new in the mathematical literature on climate models. We prove that if the solar constant is represented by λ ∈ (λ1, λ2), for suitable λ1 < λ2, then there are exactly two stationary solutions giving rise to a free boundary (i.e. generating two symmetric polar ice caps: North and South ones) and a third solution corresponding to a totally ice covered Earth. Moreover, we prove that the solution with smaller polar ice caps is stable and the one with bigger ice caps is unstable.
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