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Policy Implications of Stochastic Learning Using a Modified PAGE2002 Model

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  • Alberth, S.
  • Hope, C.

Abstract

We consider the importance of Endogenous Technical Change (ETC) on the risk profiles for different abatement strategies using the PAGE2002 model with ETC. Three outcomes from this modelling research have significant impacts on the way we ‘optimise’ the greenhouse gas abatement path. Firstly, it was found that for most standard abatement paths there would be an initial "learning investment" required that would substantially reduce the unit costs of CO2 abatement as compared to a business as usual scenario. Secondly, optimising an abatement program where ETC has been included can lead to an increased risk profile during the time of widespread CO2 abatements due to the costs associated with learning. Finally, the inclusion of ETC leads to a slightly deferred optimised abatement path followed by a drastic abatement program that itself would seem highly impractical. Together, the results draw attention to the possibilities of uncovering uncertainty through proactive abatements.

Suggested Citation

  • Alberth, S. & Hope, C., 2006. "Policy Implications of Stochastic Learning Using a Modified PAGE2002 Model," Cambridge Working Papers in Economics 0633, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:0633
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    References listed on IDEAS

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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