It has been argued recently that the combination of risk aversion and an uncertainty distribution of future temperature change with a heavy upper tail invalidates mainstream economic analyses of climate change policy. A simple model is used to explore the effect of imposing an upper bound on future temperature change. The analysis shows that imposing even a high bound reverses the earlier argument and that the optimal policy, as measured by the willingness to pay to avoid climate change, is relatively insensitive to this bound over a wide range.
Technology Partners: MimirTech
Links:
[1] http://admin.indiaenvironmentportal.org.in/feature-article/bounded-uncertainty-and-climate-change-economics
[2] http://admin.indiaenvironmentportal.org.in/category/author/christopher-j-costello
[3] http://admin.indiaenvironmentportal.org.in/category/author/michael-g-neubert
[4] http://admin.indiaenvironmentportal.org.in/category/author/stephen-polasky-et-al
[5] http://admin.indiaenvironmentportal.org.in/category/journal/proceedings-national-academy-sciences
[6] http://admin.indiaenvironmentportal.org.in/category/thesaurus/climate-change
[7] http://admin.indiaenvironmentportal.org.in/category/thesaurus/climate-economics
[8] http://admin.indiaenvironmentportal.org.in/category/thesaurus/risk-assessment
