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Uncertain climate change in an intergenerational planning model

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Author Info
Asbjørn Torvanger
Abstract

A three-generation planning model incorporating uncertain climate change is developed. Each generation features a production activity based on capital and an exhaustible resource. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The model is solved by stochastic dynamic programming. If the climate impact and climate change probability is constant, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability. If, however, climate impact and climate change probability increases with increased aggregate resource use, this result is reversed. Copyright Kluwer Academic Publishers 1997

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File URL: http://hdl.handle.net/10.1007/BF02441372
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Publisher Info
Article provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.

Volume (Year): 9 (1997)
Issue (Month): 1 (January)
Pages: 103-124
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Handle: RePEc:kap:enreec:v:9:y:1997:i:1:p:103-124

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Related research
Keywords: climate change; uncertainty; irreversibility; intergenerational; stochastic dynamic programming; resource extraction;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Spash, Clive L. & d'Arge, Ralph C., 1989. "The greenhouse effect and intergenerational transfer," Energy Policy, Elsevier, vol. 17(2), pages 88-96, April. [Downloadable!] (restricted)
  2. Ulph, A. & Ulph, D., 1994. "Global Warming: Why Irreversibility May Not Require Lower Current Emissions of Greenhouse Gases," Discussion Paper Series In Economics And Econometrics 9402, Economics Division, School of Social Sciences, University of Southampton.
  3. Cicchetti, Charles J & Freeman, A Myrick, III, 1971. "Option Demand and Consumer Surplus: Further Comment," The Quarterly Journal of Economics, MIT Press, vol. 85(3), pages 528-39, August. [Downloadable!] (restricted)
  4. Fisher, Anthony C & Hanemann, W Michael, 1990. " Information and the Dynamics of Environmental Protection: The Concept of the Critical Period," Scandinavian Journal of Economics, Blackwell Publishing, vol. 92(3), pages 399-414.
  5. Zeckhauser, Richard J, 1969. "Resource Allocation with Probabilistic Individual Preferences," American Economic Review, American Economic Association, vol. 59(2), pages 546-52, May. [Downloadable!] (restricted)
  6. Withagen, Cees, 1994. "Pollution and exhaustibility of fossil fuels," Resource and Energy Economics, Elsevier, vol. 16(3), pages 235-242, August. [Downloadable!] (restricted)
  7. Ulph, Alistair & Ulph, David, 1994. "The Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 857-68, Supplemen. [Downloadable!] (restricted)
  8. Arrow, Kenneth J & Fisher, Anthony C, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 312-19, May. [Downloadable!] (restricted)
  9. R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Henry, Claude, 1974. "Investment Decisions Under Uncertainty: The "Irreversibility Effect."," American Economic Review, American Economic Association, vol. 64(6), pages 1006-12, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Maria Cunha-E-Sá & Clara Costa-Duarte, 2000. "Endogenous Future Preferences and Conservation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 16(2), pages 253-262, June. [Downloadable!] (restricted)
  2. Jon Gjerde, Sverre Grepperud and Snorre Kverndokk, 1998. "Optimal Climate Policy under the Possibility of a Catastrophe," Discussion Papers 209, Research Department of Statistics Norway. [Downloadable!]
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