Uncertain Outcomes and Climate Change Policy
Focusing on tail effects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. I estimate the fraction of consumption w_(_ ) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limit...
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| Format: | Working Paper |
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MIT Center for Energy and Environmental Policy Research
2010
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| Online Access: | http://hdl.handle.net/1721.1/51679 |
| _version_ | 1826207974651068416 |
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| author | Pindyck, Robert S. |
| author_facet | Pindyck, Robert S. |
| author_sort | Pindyck, Robert S. |
| collection | MIT |
| description | Focusing on tail effects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. I estimate the fraction of consumption w_(_ ) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limited to _ . Using information on the distributions for temperature change and economic impact from studies assembled by the IPCC and from “integrated assessment models” (IAMs), I fit displaced gamma distributions for these variables. Unlike existing IAMs, I model economic impact as a relationship between temperature change and the growth rate of GDP as opposed to its level, so that warming has a permanent impact on future GDP. The fitted distributions for temperature change and economic impact generally yield values of w_(_ ) below 2%, even for small values of _ , unless one assumes extreme parameter values and/or substantial shifts in the temperature distribution. These results are consistent with moderate abatement policies. |
| first_indexed | 2024-09-23T13:57:53Z |
| format | Working Paper |
| id | mit-1721.1/51679 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T13:57:53Z |
| publishDate | 2010 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/516792019-04-11T03:01:33Z Uncertain Outcomes and Climate Change Policy Pindyck, Robert S. Focusing on tail effects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. I estimate the fraction of consumption w_(_ ) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limited to _ . Using information on the distributions for temperature change and economic impact from studies assembled by the IPCC and from “integrated assessment models” (IAMs), I fit displaced gamma distributions for these variables. Unlike existing IAMs, I model economic impact as a relationship between temperature change and the growth rate of GDP as opposed to its level, so that warming has a permanent impact on future GDP. The fitted distributions for temperature change and economic impact generally yield values of w_(_ ) below 2%, even for small values of _ , unless one assumes extreme parameter values and/or substantial shifts in the temperature distribution. These results are consistent with moderate abatement policies. Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. 2010-02-09T20:14:13Z 2010-02-09T20:14:13Z 2009-08 Working Paper 2009-007 http://hdl.handle.net/1721.1/51679 MIT-CEEPR;09-007 application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Pindyck, Robert S. Uncertain Outcomes and Climate Change Policy |
| title | Uncertain Outcomes and Climate Change Policy |
| title_full | Uncertain Outcomes and Climate Change Policy |
| title_fullStr | Uncertain Outcomes and Climate Change Policy |
| title_full_unstemmed | Uncertain Outcomes and Climate Change Policy |
| title_short | Uncertain Outcomes and Climate Change Policy |
| title_sort | uncertain outcomes and climate change policy |
| url | http://hdl.handle.net/1721.1/51679 |
| work_keys_str_mv | AT pindyckroberts uncertainoutcomesandclimatechangepolicy |