IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v60y2018icp127-140.html
   My bibliography  Save this article

Uncertainty in environmental economics: The problem of entropy and model choice

Author

Listed:
  • Halkos, George
  • Kitsos, Christos

Abstract

In this paper the appropriate background in mathematics and statistics is considered in developing methods to investigate the uncertainty problem associated with environmental economics. A new generalized measure of uncertainty is introduced and a number of sources of uncertainty are discussed and presented. The causes of uncertainty are recognized and an examination is made of how they affect the adopted policies and how important their management is in any decision-making process, either under the introduced generalized normal distribution or the model choice. We show that mathematical models formulate the problem and statistical models offer possible solutions, restricting the underlying uncertainty, given the model and the error assumptions are correct. The mathematical approach can be adopted using environmental economics problems by paying attention to model choice uncertainty. As uncertainty is always present, we discuss both the model choice uncertainty and the generalized normal distribution uncertainty, through new entropy measures.

Suggested Citation

  • Halkos, George & Kitsos, Christos, 2018. "Uncertainty in environmental economics: The problem of entropy and model choice," Economic Analysis and Policy, Elsevier, vol. 60(C), pages 127-140.
  • Handle: RePEc:eee:ecanpo:v:60:y:2018:i:c:p:127-140
    DOI: 10.1016/j.eap.2018.09.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592618301541
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.eap.2018.09.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Halkos, George E. & Tsilika, Kyriaki D., 2017. "Climate change effects and their interactions: An analysis aiming at policy implications," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 140-146.
    2. Quiggin, John, 2008. "Uncertainty and Climate Change Policy," Economic Analysis and Policy, Elsevier, vol. 38(2), pages 203-210, September.
    3. George E. Halkos & Dimitra C. Kitsou, 2015. "Uncertainty in optimal pollution levels: modelling and evaluating the benefit area," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 58(4), pages 678-700, April.
    4. George E. HALKOS & George J. PAPAGEORGIOU, 2016. "Dynamical Methods Applied in Natural Resource Economics," Journal of Economics and Political Economy, KSP Journals, vol. 3(1), pages 12-31, March.
    5. Halkos, George & Papageorgiou, George, 2008. "Extraction of non-renewable resources: a differential game approach," MPRA Paper 37596, University Library of Munich, Germany.
    6. Managi, Shunsuke & Guan, Dabo, 2017. "Multiple disasters management: Lessons from the Fukushima triple events," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 114-122.
    7. George E. Halkos & Dimitra C. Kitsou, 2018. "Weighted location differential tax in environmental problems," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(1), pages 1-15, January.
    8. George Halkos & Christos Kitsos, 2005. "Optimal pollution level: a theoretical identification," Applied Economics, Taylor & Francis Journals, vol. 37(13), pages 1475-1483.
    9. George Halkos, 1994. "Optimal abatement of sulphur emissions in Europe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(2), pages 127-150, April.
    10. Morikawa, Masayuki, 2016. "How uncertain are economic policies? New evidence from a firm survey," Economic Analysis and Policy, Elsevier, vol. 52(C), pages 114-122.
    11. George Halkos, 1996. "Incomplete information in the acid rain game," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(2), pages 129-148, June.
    12. Hutton, J P & Halkos, G E, 1995. "Optimal acid rain abatement policy for Europe: An analysis for the year 2000," Energy Economics, Elsevier, vol. 17(4), pages 259-275, October.
    13. Halkos, George E., 1993. "Sulphur abatement policy: Implications of cost differentials," Energy Policy, Elsevier, vol. 21(10), pages 1035-1043, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Halkos, George & Kitsos, Christos, 2018. "Mathematics vs. Statistics in tackling Environmental Economics uncertainty," MPRA Paper 85280, University Library of Munich, Germany.
    2. George E. Halkos & Dimitra C. Kitsou, 2018. "Weighted location differential tax in environmental problems," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(1), pages 1-15, January.
    3. Halkos, George & Tsilika, Kyriaki, 2017. "Computational analysis of source receptor air pollution problems," MPRA Paper 77305, University Library of Munich, Germany.
    4. Halkos, George & Barmpoudaki, Kyriaki & Voulagkas, George & Tsilika, Kyriaki, 2018. "Exploring the EMEP Input-Output model of air pollution," MPRA Paper 90267, University Library of Munich, Germany.
    5. Halkos, George & Kitsou, Dimitra, 2014. "A weighted location differential tax method in environmental problems," MPRA Paper 59502, University Library of Munich, Germany.
    6. Halkos, George & Managi, Shunsuke & Tsilika, Kyriaki, 2018. "Spatiotemporal distribution of inclusive wealth data: An illustrated guide," MPRA Paper 85711, University Library of Munich, Germany.
    7. George Halkos & Shunsuke Managi & Kyriaki Tsilika, 2018. "Measuring air polluters’ responsibility in transboundary pollution networks," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(3), pages 619-639, July.
    8. George E. Halkos & Kyriaki D. Tsilika, 2021. "Towards Better Computational Tools for Effective Environmental Policy Planning," Computational Economics, Springer;Society for Computational Economics, vol. 58(3), pages 555-572, October.
    9. George, Halkos E. & George, Papageorgiou J. & Emmanuel, Halkos G. & John, Papageorgiou G., 2019. "Environmental regulation and economic cycles," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 172-177.
    10. Halkos, George, 2018. "Environment and Sustainable Development," MPRA Paper 86490, University Library of Munich, Germany.
    11. Halkos, George & Papageorgiou, George, 2012. "Pollution abatement and reservation prices in a market game," MPRA Paper 42150, University Library of Munich, Germany.
    12. Halkos, George, 2013. "Uncertainty in optimal pollution levels: Modeling the benefit area," MPRA Paper 47768, University Library of Munich, Germany.
    13. Halkos, George, 1997. "Modelling optimal nitrogen oxides abatement in Europe," MPRA Paper 33132, University Library of Munich, Germany.
    14. Halkos, George & Gkargkavouzi, Anastasia, 2024. "Personality traits and associations with pro-environmental and economically-relevant behaviors: A brief overview of research evidence," MPRA Paper 119775, University Library of Munich, Germany.
    15. Halkos, George, 1993. "An evaluation of the direct costs of abatement under the main desulphurisation technologies," MPRA Paper 32588, University Library of Munich, Germany.
    16. George Halkos, 1996. "Incomplete information in the acid rain game," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(2), pages 129-148, June.
    17. Halkos, George & Tzeremes, Nickolaos & Kourtzidis, Stavros, 2014. "Abating CO2 emissions in the Greek energy and industry sectors," MPRA Paper 60807, University Library of Munich, Germany.
    18. Halkos, George, 2000. "Determining optimal air quality standards: Quantities or prices?," MPRA Paper 42849, University Library of Munich, Germany.
    19. Dritsas, Sophoclis E., 2020. "The effect of sea level rise on coastal populations: The case of the Gironde (Estuaries of Gironde)," Economic Analysis and Policy, Elsevier, vol. 66(C), pages 41-50.
    20. Halkos, George & Papageorgiou, George, 2016. "Optimal abatement and taxation for internalizing externalities: A dynamic game with feedback strategies," MPRA Paper 74467, University Library of Munich, Germany.

    More about this item

    Keywords

    Uncertainty; Environmental economics; Entropy; Model;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:60:y:2018:i:c:p:127-140. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.