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Mitigating Global Warming: A Real Option Approach

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  • Marc Chesney
  • Pierre Lasserre
  • Bruno Troja

Abstract

Mitigation and adaptation represent two solutions to the issue of global warming. While mitigation aims at reducing CO2 emissions and preventing climate change, adaptation encompasses a broad scope of techniques used to reduce the impacts of climate change once they have occurred. Both have direct costs on a country’s Gross Domestic Product, but costs also arise from temperature increases due to inaction. This paper introduces a tipping point in a real options model and analyzes optimal investment choices in mitigation and their timing.
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  • Marc Chesney & Pierre Lasserre & Bruno Troja, 2016. "Mitigating Global Warming: A Real Option Approach," CIRANO Working Papers 2016s-34, CIRANO.
  • Handle: RePEc:cir:cirwor:2016s-34
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    File URL: https://cirano.qc.ca/files/publications/2016s-34.pdf
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    Cited by:

    1. Chi Truong & Matteo Malavasi & Han Li & Stefan Trueck & Pavel V. Shevchenko, 2024. "Optimal dynamic climate adaptation pathways: a case study of New York City," Papers 2402.02745, arXiv.org.

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    Keywords

    Adaptation; Mitigation; Real Options; Delay; Tipping Point; Climate Change; CO2; Gross Domestic Product; Adaptation; Mitigation; Options réelles; Délai; Point de basculement; Changement climatique; CO2; Produit national brut;
    All these keywords.

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