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The “Doomsday” Effect in Climate Policies. Why is the Present Decade so Crucial to Tackling the Climate Challenge?

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Author Info

  • Baptiste Perrissin Fabert

    (Centre International de Recherche Agronomique pour le Développement)

  • Etienne Espagne

    (CIRED)

  • Antonin Pottier

    (CIRED)

  • Patrice Dumas

    (Centre International de Recherche Agronomique pour le Développement)

Abstract

Despite growing scientific evidence that passing a 2°C temperature increase may trigger tipping points in climate dynamics, most Integrated Assessment Models (IAM) based on Cost Benefit Analysis (CBA) with smooth quadratic damage functions are unable to account for the possibility of strong increase in climate damage. Our IAM RESPONSE makes it possible to bridge this gap by integrating a threshold effect damage function which sets a threshold of temperature increase from which climate damages increase significantly. To fit with on-going climate negotiations, this threshold is set at 2°C. Regardless of the bleak prospect of passing the threshold, it turns out that among a broad set of scenarios accounting for the diversity of worldviews in the climate debate, overshooting the 2°C target and then facing the resulting damage may become an optimal strategy for many economic agents who are struck by what we call a “doomsday effect”. We show that this effect happens for any level of jump in damage and dramatically increases if the beginning of mitigation efforts is postponed till the decade 2010-2020 on. In light of these results, we believe that any further delay in reaching a clear international agreement will close the window of opportunity for meeting the 2°C target with a reasonable chance of diplomatic success.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2012.62.

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Date of creation: Sep 2012
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Handle: RePEc:fem:femwpa:2012.62

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Keywords: Integrated Assessment Model; Non Linear Effect; Doomsday Effect; 2°C Target;

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  1. Keller, Klaus & Bolker, Benjamin M. & Bradford, D.F.David F., 2004. "Uncertain climate thresholds and optimal economic growth," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 723-741, July.
  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. Baptiste Perrissin Fabert & Patrice Dumas & Jean-Charles Hourcade, 2012. "What Social Cost of Carbon? A Mapping of the Climate Debate," Working Papers 2012.34, Fondazione Eni Enrico Mattei.
  4. Lempert, Robert J. & Sanstad, Alan H. & Schlesinger, Michael E., 2006. "Multiple equilibria in a stochastic implementation of DICE with abrupt climate change," Energy Economics, Elsevier, vol. 28(5-6), pages 677-689, November.
  5. Kousky, Carolyn & Rostapshova, Olga & Toman, Michael & Zeckhauser, Richard, 2009. "Responding to threats of climate change mega-catastrophes," Policy Research Working Paper Series 5127, The World Bank.
  6. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
  7. Hallegatte, Stephane & Dumas, Patrice & Hourcade, Jean-Charles, 2010. "A note on the economic cost of climate change and the rationale to limit it below 2°C," Policy Research Working Paper Series 5179, The World Bank.
  8. Gjerde, Jon & Grepperud, Sverre & Kverndokk, Snorre, 1999. "Optimal climate policy under the possibility of a catastrophe," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 289-317, August.
  9. Céline Guivarch & Stéphane Hallegatte, 2011. "2C or Not 2C?," Working Papers 2011.87, Fondazione Eni Enrico Mattei.
  10. Jean-Charles Hourcade & Philippe Ambrosi & Stéphane Hallegatte & Franck Lecocq & Patrice Dumas & Minh Ha-Duong, 2003. "Optimal control models and elicitation of attitudes towards climate damages," Post-Print halshs-00000966, HAL.
  11. repec:reg:wpaper:629 is not listed on IDEAS
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