The risk-adjusted carbon price
The social cost of carbon is the expected present value of damages from emitting one ton of carbon today. We use perturbation theory to derive an approximate tractable expression for this cost adjusted for climatic and economic risk. We allow for different aversion to risk and intertemporal fluctuat...
| Autores principales: | , |
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| Formato: | Journal article |
| Lenguaje: | English |
| Publicado: |
American Economic Association
2021
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| _version_ | 1826308382718427136 |
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| author | van den Bremer, TS van der Ploeg, F |
| author_facet | van den Bremer, TS van der Ploeg, F |
| author_sort | van den Bremer, TS |
| collection | OXFORD |
| description | The social cost of carbon is the expected present value of damages from emitting one ton of carbon today. We use perturbation theory to derive an approximate tractable expression for this cost adjusted for climatic and economic risk. We allow for different aversion to risk and intertemporal fluctuations, skewness and dynamics in the risk distributions of climate sensitivity and the damage ratio, and correlated shocks. We identify prudence, insurance, and exposure effects, reproduce earlier analytical results, and offer analytical insights into numerical results on the effects of economic and damage ratio uncertainty and convex damages on the optimal carbon price. |
| first_indexed | 2024-03-07T07:18:41Z |
| format | Journal article |
| id | oxford-uuid:a3dc3691-f212-4ef3-b8c4-a9058330b067 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T07:18:41Z |
| publishDate | 2021 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | oxford-uuid:a3dc3691-f212-4ef3-b8c4-a9058330b0672022-09-02T08:27:04ZThe risk-adjusted carbon priceJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:a3dc3691-f212-4ef3-b8c4-a9058330b067EnglishSymplectic ElementsAmerican Economic Association2021van den Bremer, TSvan der Ploeg, FThe social cost of carbon is the expected present value of damages from emitting one ton of carbon today. We use perturbation theory to derive an approximate tractable expression for this cost adjusted for climatic and economic risk. We allow for different aversion to risk and intertemporal fluctuations, skewness and dynamics in the risk distributions of climate sensitivity and the damage ratio, and correlated shocks. We identify prudence, insurance, and exposure effects, reproduce earlier analytical results, and offer analytical insights into numerical results on the effects of economic and damage ratio uncertainty and convex damages on the optimal carbon price. |
| spellingShingle | van den Bremer, TS van der Ploeg, F The risk-adjusted carbon price |
| title | The risk-adjusted carbon price |
| title_full | The risk-adjusted carbon price |
| title_fullStr | The risk-adjusted carbon price |
| title_full_unstemmed | The risk-adjusted carbon price |
| title_short | The risk-adjusted carbon price |
| title_sort | risk adjusted carbon price |
| work_keys_str_mv | AT vandenbremerts theriskadjustedcarbonprice AT vanderploegf theriskadjustedcarbonprice AT vandenbremerts riskadjustedcarbonprice AT vanderploegf riskadjustedcarbonprice |