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Recent thinking about the economics of climate change has concerned the uncertainty about the upper bound of both climate sensitivity to greenhouse gases and the damages that might occur at high temperatures. This argument suggests that the appropriate probability distributions for these factors...
Persistent link: https://www.econbiz.de/10009273416
This paper in applied theory argues that there is a loose chain of reasoning connecting the following three basic links in the economics of climate change: 1) additive damages may be more appropriate for analyzing the impacts of global warming than multiplicative damages; 2) an uncertain...
Persistent link: https://www.econbiz.de/10003832132
-form expressions of welfare loss from shocks and epistemological uncertainty identify the interaction of (intertemporal) risk attitude …
Persistent link: https://www.econbiz.de/10011305430
There is a lot we know about climate change, but there is also a lot we don't know. Even if we knew how much CO2 will be emitted over the coming decades, we wouldn't know how much temperatures will rise as a result. And even if we could predict the extent of warming that will occur, we can say...
Persistent link: https://www.econbiz.de/10012225170
analyze the effect of risk aversion, ambiguity aversion and the elasticity of intertemporal substitution on the willingness to … pay to avoid climate change risk. The first part of the paper analyzes a general disaster (jump) risk model with a … constant arrival rate of disasters. This provides useful intuition in how preferences influence valuation of long-term risk …
Persistent link: https://www.econbiz.de/10012024032
We develop a financial-economic model for carbon pricing with an explicit representation of decision making under risk … specifications. We show that risk associated with high damages in the long term leads to stringent mitigation of carbon dioxide … emissions in the near term. Our results provide insight into how a systematic incorporation of climate-related risk influences …
Persistent link: https://www.econbiz.de/10013549072
This note considers the treatment of risk and uncertainty in the recently established "social cost of carbon" (SCC) for … discounting, it mis-estimated climate risk, possibly hugely. Given the uncertainty about estimating the SCC, the note concludes by … that very target. -- Ambiguity ; climate change ; discounting ; integrated assessment modelling ; risk ; social cost of …
Persistent link: https://www.econbiz.de/10009238751
The social cost of carbon - or marginal damage caused by an additional ton of carbon dioxide emissions - has been estimated by a U.S. government working group at $21 in 2010. That calculation, however, omits many of the biggest risks associated with climate change, and downplays the impact of...
Persistent link: https://www.econbiz.de/10009304029
We use perturbation methods to derive a rule for the optimal risk-adjusted social cost of carbon (SCC) that … different aversions to risk and intertemporal fluctuations, convex damages, uncertainties in economic growth, atmospheric carbon …-run climate feedbacks. Our non-certainty-equivalent rule for the SCC incorporates precaution, risk insurance, and climate …
Persistent link: https://www.econbiz.de/10011996310
. Here we focus on the areas where IAMs can be deployed to asses uncertainty and risk management, learning, and regional …
Persistent link: https://www.econbiz.de/10011850330