highly sensitive to uncertainty. We briefly summarize the theory, stressing its empirical implications. We then use cross …-section and time-series data for a set of developing and industrialized countries to explore the relevance of the theory for … - affects investment as the theory suggests, but the size of the effect is moderate, and is greatest for developing countries …

I examine the risk/return tradeoff for environmental investments, and its implications for policy choice. Consider a … risk? Using a simple model of a stock externality (e.g., temperature) that evolves stochastically, I examine the … combinations of risk and expected returns as policy objectives. Given cost estimates for reducing risk and increasing expected …

In a world of certainty, the design of environmental policy is relatively straightforward, and boils down to maximizing … the present value of the flow of social benefits minus costs. But the real world is one of considerable uncertainty …