IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v9y1997i1p103-124.html
   My bibliography  Save this article

Uncertain climate change in an intergenerational planning model

Author

Listed:
  • Asbjørn Torvanger

Abstract

A three-generation planning model incorporating uncertain climate change is developed. Each generation features a production activity based on capital and an exhaustible resource. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The model is solved by stochastic dynamic programming. If the climate impact and climate change probability is constant, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability. If, however, climate impact and climate change probability increases with increased aggregate resource use, this result is reversed. Copyright Kluwer Academic Publishers 1997

Suggested Citation

  • 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.
    • Handle: RePEc:kap:enreec:v:9:y:1997:i:1:p:103-124
    DOI: 10.1007/BF02441372
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF02441372
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/BF02441372?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Charles J. Cicchetti & A. Myrick Freeman III, 1971. "Option Demand and Consumer Surplus: Further Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(3), pages 528-539.
    2. Zeckhauser, Richard J, 1969. "Resource Allocation with Probabilistic Individual Preferences," American Economic Review, American Economic Association, vol. 59(2), pages 546-552, May.
    3. Kenneth J. Arrow & Anthony C. Fisher, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 4, pages 76-84, Palgrave Macmillan.
    4. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(5), pages 29-45.
    5. Spash, Clive L. & d'Arge, Ralph C., 1989. "The greenhouse effect and intergenerational transfer," Energy Policy, Elsevier, vol. 17(2), pages 88-96, April.
    6. Fisher, Anthony C & Hanemann, W Michael, 1990. " Information and the Dynamics of Environmental Protection: The Concept of the Critical Period," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(3), pages 399-414.
    7. Henry, Claude, 1974. "Investment Decisions Under Uncertainty: The "Irreversibility Effect."," American Economic Review, American Economic Association, vol. 64(6), pages 1006-1012, December.
    8. Ulph, A. & Ulph, D., 1994. "Global warming: why irreversibility may not require lower current emissions of greenhouse gases," Discussion Paper Series In Economics And Econometrics 9402, Economics Division, School of Social Sciences, University of Southampton.
    9. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, December.
    10. Withagen, Cees, 1994. "Pollution and exhaustibility of fossil fuels," Resource and Energy Economics, Elsevier, vol. 16(3), pages 235-242, August.
    11. Ulph, Alistair & Ulph, David, 1994. "The Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 857-868, Supplemen.
    12. D. R. Byerlee, 1971. "Option Demand and Consumer Surplus: Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(3), pages 523-527.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael Toman, 1998. "Research Frontiers in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 603-621, April.
    2. Nævdal, Erik & Vislie, Jon, 2012. "Resource Depletion and Capital Accumulation under Catastrophic Risk: The Role of Stochastic Thresholds and Stock Pollution," Memorandum 24/2012, Oslo University, Department of Economics.
    3. Gollier, Christian & Jullien, Bruno & Treich, Nicolas, 2000. "Scientific progress and irreversibility: an economic interpretation of the 'Precautionary Principle'," Journal of Public Economics, Elsevier, vol. 75(2), pages 229-253, February.
    4. Thorsten Moenig, 2021. "Efficient valuation of variable annuity portfolios with dynamic programming," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(4), pages 1023-1055, December.
    5. 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.
    6. García, Jorge H. & Torvanger, Asbjørn, 2019. "Carbon leakage from geological storage sites: Implications for carbon trading," Energy Policy, Elsevier, vol. 127(C), pages 320-329.
    7. Maria Cunha-E-Sá & Clara Costa-Duarte, 2000. "Endogenous Future Preferences and Conservation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(2), pages 253-262, June.
    8. Nævdal, Eric & Vislie, Jon, 2013. "Resource Depletion and Capital Accumulation under Catastrophic Risk: Policy Actions against Stochastic Thresholds and Stock Pollution," Memorandum 24/2013, Oslo University, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria Cunha-E-Sá & Clara Costa-Duarte, 2000. "Endogenous Future Preferences and Conservation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(2), pages 253-262, June.
    2. Fisher, Anthony C & Peterson, Frederick M, 1976. "The Environment in Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 14(1), pages 1-33, March.
    3. Kirby, Michael G. & Blyth, Michael J., 1987. "Economic Aspects Of Land Degradation In Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 31(2), pages 1-21, August.
    4. Attanasi, Giuseppe Marco & Montesano, Aldo, 2010. "Testing Value vs Waiting Value in Environmental Decisions under Uncertainty," TSE Working Papers 10-154, Toulouse School of Economics (TSE).
    5. Jean Charles Hourcade & Franck Lecocq, 2003. "Le taux d'actualisation contre le principe de précaution ? Leçons à partir du cas des politiques climatiques," Working Papers halshs-00000967, HAL.
    6. Marc Baudry, 2000. "Joint Management of Emission Abatement and Technological Innovation for Stock Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(2), pages 161-183, June.
    7. Jinhua Zhao & Catherine L. Kling, 2009. "Welfare Measures when Agents can Learn: A Unifying Theory," Economic Journal, Royal Economic Society, vol. 119(540), pages 1560-1585, October.
    8. Jackie Krafft & Isabelle Nicolaï, 1995. "Commitment Procedures In R&D Investments : An Examination Of Different Varieties," Post-Print hal-01799270, HAL.
    9. Pindyck, Robert S., 2000. "Irreversibilities and the timing of environmental policy," Resource and Energy Economics, Elsevier, vol. 22(3), pages 233-259, July.
    10. Cesare Dosi & Michele Moretto, 1997. "Pollution Accumulation and Firm Incentives to Accelerate Technological Change Under Uncertain Private Benefits," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(3), pages 285-300, October.
    11. 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.
    12. Guruswamy Babu, P. & Kavi Kumar, K. S. & Murthy, N. S., 1997. "An overlapping generations model with exhaustible resources and stock pollution," Ecological Economics, Elsevier, vol. 21(1), pages 35-43, April.
    13. Segarra, Eduardo & Taylor, Daniel B., 1985. "Option Value of Soil, An Irreplaceable Asset From The Social Point of View," 1985 Annual Meeting, August 4-7, Ames, Iowa 278547, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Julien Daubanes & André Grimaud, 2010. "Taxation of a Polluting Non-renewable Resource in the Heterogeneous World," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(4), pages 567-588, December.
    15. Chichilnisky, Graciela, 1998. "The economics of global environmental risk," MPRA Paper 8812, University Library of Munich, Germany.
    16. Robert S. Pindyck, 2006. "Uncertainty In Environmental Economics," NBER Working Papers 12752, National Bureau of Economic Research, Inc.
    17. Christian Beermann, 2015. "Climate Policy and the Intertemporal Supply of Fossil Resources," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 62.
    18. Christian Groth & Karl-Josef Koch & Thomas Steger, 2006. "Rethinking the Concept of Long-Run Economic Growth," CESifo Working Paper Series 1701, CESifo.
    19. Edouard Civel & Marc Baudry, 2018. "The Fate of Inventions. What can we learn from Bayesian learning in strategic options model of adoption ?," EconomiX Working Papers 2018-47, University of Paris Nanterre, EconomiX.
    20. Guillouet, Louise & Martimort, David, 2023. "Acting in the Darkness: Towards some Foundations for the Precautionary Principle," TSE Working Papers 23-1411, Toulouse School of Economics (TSE), revised 05 Jan 2024.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:9:y:1997:i:1:p:103-124. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.