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Risk aversion - a necessary condition for limiting global environmental risks?

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  • Ohl, Cornelia
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    Abstract

    Standard risk economic analysis suggests that global environmental risk is lower in the case of risk aversion than in the case of risk neutrality or risk seeking. Maybe the reason why the Advisory Council of the German Government on Global Environmental Change (WBGU) explicitly recommends to behave as a risk averter when dealing with problems of global risk management. However risk aversion not always guaranties the limitation of a global pollutant, like CO2. To show this the paper focuses on two different landscapes of risk that are motivated by aspects of ecological vulnerability of the nations as well as the country-specific abilities to cope with environmental change. Each is defined in terms of the means – and of the standard deviation ó of the national welfare distributions in different states of emission behaviour. The nations under consideration are either risk neutral, risk averse or risk seeking and are sovereign in taking measures of global risk reduction. Following the assumption of expected utility maximisation it is revealed that taking and enforcing measures of risk reduction critically depend on the interplay of the subjective risk preferences and the landscape of risk induced by the effects of global risk control. Hence, given the national risk preferences, it is the landscape of risk that determines the co-operative power of national risk attitudes and with it attributes the nations as environmental-friendly or not. -- Risikoökonomische Analysen lassen den Schluss zu, dass die Begrenzung globaler Umweltrisiken im Fall der Risikoscheu auf einem höheren Niveau erfolgt als unter Risikoneutralität oder Risikofreude. Möglicherweise empfiehlt deshalb auch der Wissenschaftliche Beirat der Bundesregierung Globale Umweltveränderung (WBGU 2000) bei der globalen Risikobegrenzung eine risikoscheue Haltung einzunehmen. Die vorliegende Analyse zeigt jedoch, dass eine risikoscheue Haltung keine Garantie für die Verringerung globaler Schadstoffe, etwa von CO2, ist. Betrachtet werden zwei Risikolandschaften, die sich durch unterschiedliche Risiko- Ertragsstrukturen auszeichnen. Die Ursache sind länderspezifische Betroffenheitslagen im Fall einer Risikofreisetzung sowie nationale Unterschiede bei der Risikobewältigung. In den Risikolandschaften agieren zwei Länder, die souverän über den Beitritt zu einem internationalen Umweltschutzabkommen entscheiden. Jedes Land optimiert entsprechend seiner länderindividuellen Risikopräferenz (die risikoscheu, risikoneutral oder risikofreudig ausgeprägt sein kann) die jeweils nationale Wohlfahrtslage. Dabei wird deutlich, dass der Beitritt zu einem internationalen Umweltschutzabkommen und die Umsetzung der damit verbundenen Pflichten wesentlich davon abhängen, ob die ?subjektive? Risikobewertung durch die Risikopräferenzen der Staaten mit den ?objektiven? (d.h. von Experten geschätzten) Risiko-Ertragsstrukturen harmonieren. Daraus ergibt sich, dass bei gegebener Risikohaltung der Staaten, letztlich der Typ der vorliegenden Risikolandschaft über die kooperationsfördernde Wirkung des Risikoverhaltens bestimmt und in Folge auch festlegt, welchen Staaten das Attribut der Umweltfreundlichkeit und welchen das des Freifahrers zufällt.

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    Bibliographic Info

    Paper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 190.

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    Date of creation: 2002
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    Handle: RePEc:zbw:hwwadp:26360

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    1. Chichilnisky, Graciela, 2000. "An axiomatic approach to choice under uncertainty with catastrophic risks," Resource and Energy Economics, Elsevier, vol. 22(3), pages 221-231, July.
    2. Oleg Eismont & Heinz Welsch, 1996. "Optimal greenhouse gas emissions under various assessments of climate change ambiguity," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 8(2), pages 129-140, September.
    3. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
    4. Fisher, Anthony C., 2000. "Investment under uncertainty and option value in environmental economics," Resource and Energy Economics, Elsevier, vol. 22(3), pages 197-204, July.
    5. Dasgupta, Partha, 1990. "The Environment as a Commodity," Oxford Review of Economic Policy, Oxford University Press, vol. 6(1), pages 51-67, Spring.
    6. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
    7. Roughgarden, Tim & Schneider, Stephen H., 1999. "Climate change policy: quantifying uncertainties for damages and optimal carbon taxes," Energy Policy, Elsevier, vol. 27(7), pages 415-429, July.
    8. Benedick, Richard Elliot, 1999. "Contrasting approaches: the ozone layer, climate change, and resolving the Kyoto dilemma," Discussion Papers, Research Professorship Environmental Policy FS II 99-404, Social Science Research Center Berlin (WZB).
    9. Dasgupta, P., 1990. "The Environment as Commodity.i," Research Paper 84, World Institute for Development Economics Research.
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