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Selfish Bureaucrats And Policy Heterogeneity In Nordhaus’ Dice

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  • RICHARD S. J. TOL

    (Department of Economics, University of Sussex, Jubilee Building, Falmer, BN1 9SL, UK2Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherland3Department of Spatial Economics Vrije Universiteit, Amsterdam, The Netherlands4Tinbergen Institute, Amsterdam, The Netherlands5CESifo, Munich, Germany6Payne Institute for Earth Resources Colorado School of Mines, Golden, CO, USA)

Abstract

Nordhaus’ seminal DICE model assesses first-best climate policy, a useful but unrealistic yardstick. I propose a measure of policy inefficacy if carbon prices are heterogeneous and use observed prices to recalibrate the DICE model. I introduce a Niskanen-inspired model of climate policy with selfish bureaucrats, and calibrate it to carbon dioxide emissions in the European Union and the policy models used by the IPCC. This model also implies a measure of policy inefficacy that I use to recalibrate DICE. The optimal global mean temperature is 1∘C perhaps 2∘C higher in the recalibrated than in the original DICE model.

Suggested Citation

  • Richard S. J. Tol, 2020. "Selfish Bureaucrats And Policy Heterogeneity In Nordhaus’ Dice," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 11(04), pages 1-16, November.
    • Handle: RePEc:wsi:ccexxx:v:11:y:2020:i:04:n:s2010007820400060
    DOI: 10.1142/S2010007820400060
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    More about this item

    Keywords

    Climate policy; price heterogeneity; selfish bureaucrats;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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