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The Climate Policy Dilemma

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  • Robert S. Pindyck

Abstract

Climate policy poses a dilemma for environmental economists. The economic argument for stringent greenhouse gas (GHG) abatement is far from clear. There is disagreement among both climate scientists and economists concerning the likelihood of alternative climate outcomes, the nature and extent of the uncertainty of those outcomes, and the framework that should be used to evaluate potential benefits from GHG abatement, including key policy parameters. I argue that the case for stringent abatement--if it can be made at all--cannot be based on the kinds of modeling exercises that have permeated the literature thus far, but instead must be based on the possibility of a catastrophic outcome. I discuss how an analysis that incorporates such an outcome might be conducted. (JEL: Q54; D81, Q51) Copyright 2013, Oxford University Press.

Suggested Citation

  • Robert S. Pindyck, 2013. "The Climate Policy Dilemma," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(2), pages 219-237, July.
    • Handle: RePEc:oup:renvpo:v:7:y:2013:i:2:p:219-237
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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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