Optimal climate policy under the possibility of a catastrophe
This paper concerns optimal emissions of greenhouse gases when catastrophic consequences are possible. A numerical model is presented which takes into account both continuous climate-feedback damages as well as the possibility of a catastrophic outcome. The uncertainty in the model concerns whether or not a future catastrophe will occur. However, the welfare losses imposed by such an outcome are assumed known to the decision-maker. An important result is that the possibility of a climate catastrophe is a major argument for greenhouse gas abatement even in absence of continuous damage. Special attention is given to analyses on the probability of a catastrophe and the pure rate of time preferences, and the implicit values of these parameters are calculated if the Rio stabilisation target is assumed to be optimal. Finally, the expected value of perfect information about the probability of the arrival of a catastrophe is estimated.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Snorre Kverndokk, 1993. "Global CO2 Agreements: A Cost-Effective Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 91-112.
- Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-937, July.
- Christiansen, Vidar & Jansen, Eilev S., 1978. "Implicit social preferences in the Norwegian system of indirect taxation," Journal of Public Economics, Elsevier, vol. 10(2), pages 217-245, October.
- Stephen C Peck & Thomas J. Teisberg, 1992. "CETA: A Model for Carbon Emissions Trajectory Assessment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 55-78.
- Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
- Peck, Stephen C & Teisberg, Thomas J, 1995. "International CO2 emissions control : An analysis using CETA," Energy Policy, Elsevier, vol. 23(4-5), pages 297-308.
- Fankhauser, Samuel & Kverndokk, Snorre, 1996.
"The global warming game -- Simulations of a CO2-reduction agreement,"
Resource and Energy Economics,
Elsevier, vol. 18(1), pages 83-102, March.
- Fankhauser, S. & Kverndokk, S., 1992. "The Global Warming Game - Simulations of a CO2 Reduction Agreement," Memorandum 13/1992, Oslo University, Department of Economics.
- Morton I. Kamien & Nancy L. Schwartz, 1971. "Optimal Maintenance and Sale Age for a Machine Subject to Failure," Management Science, INFORMS, vol. 17(8), pages 495-504, April.
- Nordhaus, William D., 1993. "Rolling the 'DICE': an optimal transition path for controlling greenhouse gases," Resource and Energy Economics, Elsevier, vol. 15(1), pages 27-50, March.
- William D. Nordhaus, 1992. "Rolling the 'Dice': An Optimal Transition Path for Controlling Greenhouse Gases," Cowles Foundation Discussion Papers 1019, Cowles Foundation for Research in Economics, Yale University.
- Jean-Marc Burniaux & John P. Martin & Giuseppe Nicoletti & Joaquim Oliveira Martins, 1992. "GREEN a Multi-Sector, Multi-Region General Equilibrium Model for Quantifying the Costs of Curbing CO2 Emissions: A Technical Manual," OECD Economics Department Working Papers 116, OECD Publishing.
- 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.
- Jon Gjerde & Sverre Grepperud & Snorre Kverndokk, 1998. "Optimal Climate Policy under the Possibility of a Catastrophe," Discussion Papers 209, Statistics Norway, Research Department.
- William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, November.
- Eyckmans, Johan & Proost, Stef & Schokkaert, Erik, 1993. "Efficiency and Distribution in Greenhouse Negotiations," Kyklos, Wiley Blackwell, vol. 46(3), pages 363-397.
- Larson, Bruce A. & Tobey, James A., 1994. "Uncertain climate change and the international policy response," Ecological Economics, Elsevier, vol. 11(1), pages 77-84, September.
- Tsur, Yacov & Zemel, Amos, 1996. "Accounting for global warming risks: Resource management under event uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1289-1305.
- Elin Berg & Snorre Kverndokk & Knut Einar Rosendahl, 1997. "Market Power, International CO2 Taxation and Oil Wealth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 33-71.
- Jean-Marc Burniaux & John P. Martin & Giuseppe Nicoletti & Joaquim Oliveira Martins, 1992. "The Costs of Reducing CO2 Emissions: A Technical Manual," OECD Economics Department Working Papers 115, OECD Publishing.
- Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, July.
- Oleg Eismont & Heinz Welsch, 1996. "Optimal greenhouse gas emissions under various assessments of climate change ambiguity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 8(2), pages 129-140, September.
- Peck, Stephen C. & Teisberg, Thomas J., 1993. "CO2 emissions control : Comparing policy instruments," Energy Policy, Elsevier, vol. 21(3), pages 222-230, March.
- William D. Nordhaus & David Popp, 1997. "What is the Value of Scientific Knowledge? An Application to Global Warming Using the PRICE Model," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-45.
- William D. Nordhaus & David Popp, 1996. "What is the Value of Scientific Knowledge? An Application to Global Warming Using the PRICE Model," Cowles Foundation Discussion Papers 1117, Cowles Foundation for Research in Economics, Yale University.
- Chakravorty, Ujjayant & Roumasset, James & Tse, Kinping, 1997. "Endogenous Substitution among Energy Resources and Global Warming," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1201-1234, December.
- Peck, Stephen C. & Teisberg, Thomas J., 1993. "Global warming uncertainties and the value of information: an analysis using CETA," Resource and Energy Economics, Elsevier, vol. 15(1), pages 71-97, March.
- Schelling, Thomas C, 1992. "Some Economics of Global Warming," American Economic Review, American Economic Association, vol. 82(1), pages 1-14, March.
- J. M. Reilly & J. A. Edmonds & R. H. Gardner & A. L. Brenkerf, 1987. "Uncertainty Analysis of the IEA/ORAU CO2 Emissions Model," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-29.
- Asbjørn Torvanger, 1997. "Uncertain climate change in an intergenerational planning model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(1), pages 103-124, January.
- Clarke, Harry R. & Reed, William J., 1994. "Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse," Journal of Economic Dynamics and Control, Elsevier, vol. 18(5), pages 991-1010, September.
- Cropper, M. L., 1976. "Regulating activities with catastrophic environmental effects," Journal of Environmental Economics and Management, Elsevier, vol. 3(1), pages 1-15, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:resene:v:21:y:1999:i:3-4:p:289-317. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.