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Schelling's Conjecture on Climate and Development: A Test

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  • Anthoff, David
  • Tol, Richard S. J.

Abstract

We use the integrated assessment model FUND to compute the income elasticities of climate change impacts for different world regions over time. We find limited support for Schelling's Conjecture that development might be the best defense against climate change impacts, and for the idea that the impacts from climate change might be akin to a "luxury good". For very poor regions, an increase in income in the short run is an effective tool to reduce impacts from climate change by making those societies less vulnerable, in particular to infectious diseases. While net climate impacts appear to be akin to a luxury good for some countries at specific times, that effect disappears in the long run as impacts from agriculture make up a large share of total impacts.

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Bibliographic Info

Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP390.

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Date of creation: Jun 2011
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Handle: RePEc:esr:wpaper:wp390

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Keywords: income elasticity/Climate change/impacts;

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  1. Schelling, Thomas C, 1992. "Some Economics of Global Warming," American Economic Review, American Economic Association, vol. 82(1), pages 1-14, March.
  2. Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
  3. P. Michael Link & Richard S.J. Tol, 2004. "Possible Economic Impacts of a Shutdown of the Thermohaline Circulation: an Application of FUND," Working Papers FNU-42, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2004.
  4. Tol, Richard S.J., 2005. "Emission abatement versus development as strategies to reduce vulnerability to climate change: an application of FUND," Environment and Development Economics, Cambridge University Press, vol. 10(05), pages 615-629, October.
  5. Tol, Richard S.J. & Ebi, Kristie L. & Yohe, Gary W., 2007. "Infectious disease, development, and climate change: a scenario analysis," Environment and Development Economics, Cambridge University Press, vol. 12(05), pages 687-706, October.
  6. Thomas Sterner & U. Martin Persson, 2008. "An Even Sterner Review: Introducing Relative Prices into the Discounting Debate," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(1), pages 61-76, Winter.
  7. J.K. Horowitz, 2002. "Preferences in the Future," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(3), pages 241-258, March.
  8. Schelling, Thomas C, 1995. "Intergenerational discounting," Energy Policy, Elsevier, vol. 23(4-5), pages 395-401.
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Cited by:
  1. Kai A. Konrad & Marcel Thum, 2012. "The Role of Economic Policy in Climate Change Adaptation," CESifo Working Paper Series 3959, CESifo Group Munich.

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