Stabilizing the Global Climate: A Simple and Robust Benefit-Cost Analysis
Most models of optimal climate change policy are complex and opaque. In this paper, it is argued that the convexity of climate damage and mitigation cost function provides a basis for the derivation of simple and robust estimates of optimal stabilization targets and carbon prices. For all but a few extreme assumptions, the optimal carbon price is between $40 and $75. Similarly, for a wide range of parameter values the optimal target is between 425 ppm and 475 ppm. In all simulations, the total cost of mitigation is below 5 per cent of income, and in most cases substantially below.
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Volume (Year): 94 (2012)
Issue (Month): 2 ()
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- Quiggin, John, 2008.
"Equity between overlapping generations,"
Risk and Sustainable Management Group Working Papers
152091, University of Queensland, School of Economics.
- William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
- 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.
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