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The “Doomsday” Effect in Climate Policies. Why is the Present Decade so Crucial to Tackling the Climate Challenge?

Author

Listed:
  • Baptiste Perrissin Fabert

    (Centre International de Recherche Agronomique pour le Développement)

  • Etienne Espagne

    (CIRED)

  • Antonin Pottier

    (CIRED)

  • Patrice Dumas

    (Centre International de Recherche Agronomique pour le Développement)

Abstract

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.

Suggested Citation

  • Baptiste Perrissin Fabert & Etienne Espagne & Antonin Pottier & Patrice Dumas, 2012. "The “Doomsday” Effect in Climate Policies. Why is the Present Decade so Crucial to Tackling the Climate Challenge?," Working Papers 2012.62, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2012.62
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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.
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    5. Patrice Dumas & Etienne Espagne & Baptiste Perrissin-Fabert & Antonin Pottier, 2012. "Comprehensive Description of RESPONSE," CIRED Working Papers hal-00866414, HAL.
    6. 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.
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    More about this item

    Keywords

    Integrated Assessment Model; Non Linear Effect; Doomsday Effect; 2°C Target;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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