The “Doomsday” Effect in Climate Policies. Why is the Present Decade so Crucial to Tackling the Climate Challenge?
Despite growing scientific evidence that passing a 2°C temperature increase may trigger tipping points in climate dynamics, most Integrated Assessment Models (IAM) based on Cost Benefit Analysis (CBA) with smooth quadratic damage functions are unable to account for the possibility of strong increase in climate damage. Our IAM RESPONSE makes it possible to bridge this gap by integrating a threshold effect damage function which sets a threshold of temperature increase from which climate damages increase significantly. To fit with on-going climate negotiations, this threshold is set at 2°C. Regardless of the bleak prospect of passing the threshold, it turns out that among a broad set of scenarios accounting for the diversity of worldviews in the climate debate, overshooting the 2°C target and then facing the resulting damage may become an optimal strategy for many economic agents who are struck by what we call a “doomsday effect”. We show that this effect happens for any level of jump in damage and dramatically increases if the beginning of mitigation efforts is postponed till the decade 2010-2020 on. In light of these results, we believe that any further delay in reaching a clear international agreement will close the window of opportunity for meeting the 2°C target with a reasonable chance of diplomatic success.
|Date of creation:||Sep 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.feem.it/Email:
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Weitzman, Martin L., 2009.
"On Modeling and Interpreting the Economics of Catastrophic Climate Change,"
3693423, Harvard University Department of Economics.
- Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
- Jean-Charles Hourcade & Philippe Ambrosi & Stéphane Hallegatte & Franck Lecocq & Patrice Dumas & Minh Ha-Duong, 2003. "Optimal control models and elicitation of attitudes towards climate damages," Post-Print halshs-00000966, HAL.
- Kousky, Carolyn & Rostapshova, Olga & Toman, Michael & Zeckhauser, Richard, 2009.
"Responding to threats of climate change mega-catastrophes,"
Policy Research Working Paper Series
5127, The World Bank.
- Kousky, Carolyn & Rostapshova, Olga & Toman, Michael & Zeckhauser, Richard, 2009. "Responding to Threats of Climate Change Mega-Catastrophes," Discussion Papers dp-09-45, Resources For the Future.
- Zeckhauser, Richard Jay & Kousky, Carolyn & Rostapshova, Olga V & Toman, Michael, 2010. "Responding to Threats of Climate Change Mega-Catastrophes," Scholarly Articles 4454155, Harvard Kennedy School of Government.
- Kousky, Carolyn & Rostapshova, Olga & Toman, Michael & Zeckhauser, Richard, 2010. "Responding to Threats of Climate Change Mega-Catastrophes," Working Paper Series rwp10-008, Harvard University, John F. Kennedy School of Government.
- 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.
- Jon Gjerde & Sverre Grepperud & Snorre Kverndokk, 1998. "Optimal Climate Policy under the Possibility of a Catastrophe," Discussion Papers 209, Research Department of Statistics Norway.
- Hallegatte, Stephane & Dumas, Patrice & Hourcade, Jean-Charles, 2010. "A note on the economic cost of climate change and the rationale to limit it below 2°C," Policy Research Working Paper Series 5179, The World Bank.
- Lempert, Robert J. & Sanstad, Alan H. & Schlesinger, Michael E., 2006. "Multiple equilibria in a stochastic implementation of DICE with abrupt climate change," Energy Economics, Elsevier, vol. 28(5-6), pages 677-689, November.
- Keller, Klaus & Bolker, Benjamin M. & Bradford, D.F.David F., 2004. "Uncertain climate thresholds and optimal economic growth," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 723-741, July.
- Etienne Espagne & Baptiste Perrissin Fabert & Antonin Pottier & Franck Nadaud & Patrice Dumas, 2012. "Disentangling the Stern/Nordhaus Controversy: Beyond the Discounting Clash," Working Papers 2012.61, Fondazione Eni Enrico Mattei.
- Patrice Dumas & Etienne Espagne & Baptiste Perrissin-Fabert & Antonin Pottier, 2012. "Comprehensive Description of RESPONSE," CIRED Working Papers hal-00866414, HAL.
- Céline Guivarch & Stéphane Hallegatte, 2011. "2C or Not 2C?," Working Papers 2011.87, Fondazione Eni Enrico Mattei.
- Baptiste Perrissin Fabert & Patrice Dumas & Jean-Charles Hourcade, 2012. "What Social Cost of Carbon? A Mapping of the Climate Debate," Working Papers 2012.34, Fondazione Eni Enrico Mattei.
- 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.
When requesting a correction, please mention this item's handle: RePEc:fem:femwpa:2012.62. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (barbara racah)
If references are entirely missing, you can add them using this form.