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Climate Policy Design Under Uncertainty

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  • Pizer, William

    ()
    (Resources for the Future)

Abstract

The uncertainty surrounding both costs and benefits associated with global climate change mitigation creates enormous hurdles for scientists, stakeholders, and decisionmakers. A key issue is how policy choices balance uncertainty about costs and benefits. This balance arises in terms of the time path of mitigation efforts as well as whether those efforts, by design, focus on effort or outcome. This paper considers two choices—price versus quantity controls and absolute versus relative/intensity emissions limits—demonstrating that price controls and intensity emissions limits favor certainty about cost over climate benefits and future emissions reductions. The paper then argues that in the near term, this favoritism is desired.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-05-44.

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Date of creation: 11 Oct 2005
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Handle: RePEc:rff:dpaper:dp-05-44

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Related research

Keywords: carbon; climate; policy; intensity; global warming; uncertainty; price; quantity;

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References

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  1. Mark Sagoff, 2003. "Cows are Better than Condos, or How Economists Help Solve Environmental Problems," Environmental Values, White Horse Press, vol. 12(4), pages 449-470, November.
  2. Newell, Richard G. & Pizer, William A., 2003. "Regulating stock externalities under uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 416-432, March.
  3. Parry Ian W. H., 1995. "Pollution Taxes and Revenue Recycling," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S64-S77, November.
  4. Newell, Richard & Anderson, Soren, 2003. "Prospects for Carbon Capture and Storage Technologies," Discussion Papers dp-02-68, Resources For the Future.
  5. Kopp, Raymond, 2004. "Near-Term Greenhouse Gas Emissions Targets," Discussion Papers dp-04-41, Resources For the Future.
  6. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
  7. Roberts, Marc J. & Spence, Michael, 1976. "Effluent charges and licenses under uncertainty," Journal of Public Economics, Elsevier, vol. 5(3-4), pages 193-208.
  8. Pizer, William, 2005. "The Case for Intensity Targets," Discussion Papers dp-05-02, Resources For the Future.
  9. Pizer, William & Newell, Richard & Zhang, Jiangfeng, 2003. "Managing Permit Markets to Stabilize Prices," Discussion Papers dp-03-34, Resources For the Future.
  10. Alan S. Manne & Richard G. Richels, 1999. "The Kyoto Protocol: A Cost-Effective Strategy for Meeting Environmental Objectives?," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 1-23.
  11. Kelly, David L. & Kolstad, Charles D., 1999. "Bayesian learning, growth, and pollution," Journal of Economic Dynamics and Control, Elsevier, vol. 23(4), pages 491-518, February.
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Citations

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Cited by:
  1. Simon Dietz & Samuel Fankhauser, 2009. "Environmental prices, uncertainty and learning," LSE Research Online Documents on Economics 37613, London School of Economics and Political Science, LSE Library.
  2. Robert N. Stavins, 2008. "Addressing climate change with a comprehensive US cap-and-trade system," Oxford Review of Economic Policy, Oxford University Press, vol. 24(2), pages 298-321, Summer.
  3. Robert S. Pindyck, 2006. "Uncertainty In Environmental Economics," NBER Working Papers 12752, National Bureau of Economic Research, Inc.
  4. repec:reg:wpaper:442 is not listed on IDEAS
  5. World Bank, 2009. "Building Response Strategies to Climate Change in Agricultural Systems in Latin America," World Bank Other Operational Studies 12473, The World Bank.

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