Affiliation:
1. Faculty of Civil Engineering and Geosciences, Delft University of Technology and Department of Engineering Science, University of Oxford (email: )
2. Department of Economics, University of Oxford and Faculty of Economics and Business, University of Amsterdam (email: )
Abstract
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. (JEL E12, G22, H23, O44, Q35, Q51, Q54)
Publisher
American Economic Association
Subject
Economics and Econometrics
Cited by
54 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献