Uncertain outcomes and climate change policy
I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. As a measure of willingness to pay (WTP), I estimate the fraction of consumption w[superscript ⁎](τ) that society would be willing to sacrifice to ensure that any increase in temperatu...
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| Format: | Article |
| Language: | en_US |
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Elsevier
2015
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| Online Access: | http://hdl.handle.net/1721.1/99115 https://orcid.org/0000-0001-8296-9875 |
| _version_ | 1826200072559263744 |
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| author | Pindyck, Robert S. |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Pindyck, Robert S. |
| author_sort | Pindyck, Robert S. |
| collection | MIT |
| description | I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. As a measure of willingness to pay (WTP), I estimate the fraction of consumption w[superscript ⁎](τ) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limited to ττ. Using information on distributions for temperature change and economic impact from recent studies assembled by the IPCC and others, I fit displaced gamma distributions for these variables. These fitted distributions, which roughly reflect the “state of knowledge” regarding warming and its impact, generally yield values of w[superscript ⁎](τ) below 2%, even for small values of ττ, consistent with moderate abatement policies. I also calculate WTP for shifts in the mean and standard deviation of the temperature distribution, and show how WTP, and thus the demand for abatement, are driven more by outcome uncertainty than expected outcomes. |
| first_indexed | 2024-09-23T11:30:43Z |
| format | Article |
| id | mit-1721.1/99115 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T11:30:43Z |
| publishDate | 2015 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | mit-1721.1/991152022-10-01T04:04:24Z Uncertain outcomes and climate change policy Pindyck, Robert S. Sloan School of Management Pindyck, Robert S. I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. As a measure of willingness to pay (WTP), I estimate the fraction of consumption w[superscript ⁎](τ) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limited to ττ. Using information on distributions for temperature change and economic impact from recent studies assembled by the IPCC and others, I fit displaced gamma distributions for these variables. These fitted distributions, which roughly reflect the “state of knowledge” regarding warming and its impact, generally yield values of w[superscript ⁎](τ) below 2%, even for small values of ττ, consistent with moderate abatement policies. I also calculate WTP for shifts in the mean and standard deviation of the temperature distribution, and show how WTP, and thus the demand for abatement, are driven more by outcome uncertainty than expected outcomes. 2015-10-01T11:53:46Z 2015-10-01T11:53:46Z 2012-01 2011-04 Article http://purl.org/eprint/type/JournalArticle 00950696 1096-0449 http://hdl.handle.net/1721.1/99115 Pindyck, Robert S. “Uncertain Outcomes and Climate Change Policy.” Journal of Environmental Economics and Management 63, no. 3 (May 2012): 289–303. https://orcid.org/0000-0001-8296-9875 en_US http://dx.doi.org/10.1016/j.jeem.2011.12.001 Journal of Environmental Economics and Management Creative Commons Attribution http://creativecommons.org/licenses/by-nc-nd/4.0/ application/pdf Elsevier SSRN |
| 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/1721.1/99115 https://orcid.org/0000-0001-8296-9875 |
| work_keys_str_mv | AT pindyckroberts uncertainoutcomesandclimatechangepolicy |