IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Choosing the optimal climate change policy in the presence of catastrophic risk

Listed author(s):
  • Bosello, Francesco
  • De Cian, Enrica
  • Ferranna, Licia

This paper contributes to the normative literature on mitigation and adaptation by analyzing their optimal policy balance in the context of climate catastrophic risk. The investigation enriches an integrated assessment model introducing the endogenous link between the probability of experiencing a climate-change related catastrophic event, the temperature increase caused by GHG emissions, and ultimately abatement choices. Results indicate that the presence of catastrophic risk induces substantial mitigation effort even in a non-cooperative setting, where usually global cooperation on climate, and accordingly substantive emission reductions, do not succeed. The policy balance is realigned from adaptation toward more mitigation, and the responsiveness of mitigation to changes in adaptation decreases. Compared to a world without climate catastrophes, risk reduces the substitutability between adaptation and mitigation because only mitigation can influence the catastrophic probability. In this setting, our analysis also shows that adaptation funds and strategic unilateral commitments to adaptation are not the most efficient ways of buying emission reduction in less developed countries, though they could create some welfare gains and induce abatement in the recipient countries.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by European Investment Bank (EIB) in its series EIB Working Papers with number 2012/03.

in new window

Date of creation: 2012
Handle: RePEc:zbw:eibwps:201203
Contact details of provider: Postal:
100, boulevard Konrad Adenauer, L-2950 Luxembourg

Phone: (+352) 43 79 1
Fax: (+352) 43 79 68 895
Web page:

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.:

in new window

  1. Heike Auerswald & Kai A. Konrad & Marcel Thum, 2011. "Adaptation, Mitigation and Risk-Taking in Climate Policy," CESifo Working Paper Series 3320, CESifo Group Munich.
  2. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
  3. Kenneth J. Arrow & Anthony C. Fisher, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, Oxford University Press, vol. 88(2), pages 312-319.
  4. repec:reg:rpubli:282 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:zbw:eibwps:201203. 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: (ZBW - German National Library of Economics)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.