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Is there space for agreement on climate change? A non-parametric approach to policy evaluation

  • Simon Dietz
  • Anca N. Matei

Economic evaluation of climate policy is notoriously dependent on assumptions about time and risk preferences, since reducing greenhouse gas emissions today has a highly uncertain pay-off, far into the future. These assumptions have always been much debated. Rather than occupy a position in this debate, we take a non-parametric approach here, based on the concept of Time-Stochastic Dominance. Using an integrated assessment model, we apply Time-Stochastic Dominance analysis to climate change, asking are there global emissions abatement targets that everyone who shares a broad class of time and risk preferences would agree to prefer? Overall we find that even tough emissions targets would be chosen by almost everyone, barring those with arguably `extreme' preferences.

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File URL: http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2014/02/WP136-Is-there-space-for-agreement-on-climate-change.pdf
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Paper provided by Grantham Research Institute on Climate Change and the Environment in its series GRI Working Papers with number 136.

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Date of creation: Oct 2013
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Handle: RePEc:lsg:lsgwps:wp136
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  1. Martin L. Weitzman, 2012. "GHG Targets as Insurance Against Catastrophic Climate Damages," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(2), pages 221-244, 03.
  2. Masako Ikefuji & Roger Laeven & Jan Magnus & Chris Muris, 2013. "Pareto utility," Theory and Decision, Springer, vol. 75(1), pages 43-57, July.
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  4. Barry ANDERSON & Emanuele BORGONOVO & Marzio GALEOTTI & Roberto ROSON, 2012. "Uncertainty in climate change modelling: can global sensitivity analysis be of help?," Departmental Working Papers 2012-18, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
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  10. 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.
  11. Robert S. Pindyck, 2010. "Fat Tails, Thin Tails, and Climate Change Policy," Working Papers 1012, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  12. Partha Dasgupta, 2007. "The Stern Review's economics of climate change," National Institute Economic Review, National Institute of Economic and Social Research, vol. 199(1), pages 4-7, January.
  13. Simon Dietz & Anca N. Matei, 2013. "Spaces for agreement: a theory of Time-Stochastic Dominance," GRI Working Papers 137, Grantham Research Institute on Climate Change and the Environment.
  14. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
  15. Simon Dietz, 2011. "High impact, low probability? An empirical analysis of risk in the economics of climate change," Climatic Change, Springer, vol. 108(3), pages 519-541, October.
  16. Richard Tol, 2012. "On the Uncertainty About the Total Economic Impact of Climate Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 53(1), pages 97-116, September.
  17. Steinar Ekern., 1980. "Time Dominance Efficiency Analysis," Research Program in Finance Working Papers 105, University of California at Berkeley.
  18. 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.
  19. Antony Millner & Simon Dietz & Geoffrey Heal, 2013. "Scientific Ambiguity and Climate Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 55(1), pages 21-46, May.
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