HOW TO MEASURE THE IMPORTANCE OF CLIMATE RISK FOR DETERMINING OPTIMAL GLOBAL ABATEMENT POLICIES?-Reference-Cited by-同舟云学术

HOW TO MEASURE THE IMPORTANCE OF CLIMATE RISK FOR DETERMINING OPTIMAL GLOBAL ABATEMENT POLICIES?

Published:2012-02 Issue:01 Volume:03 Page:1250004
ISSN:2010-0078
Container-title:Climate Change Economics
language:en
Short-container-title:Clim. Change Econ.

Author:

LORENZ ALEXANDER¹²,KRIEGLER ELMAR¹,HELD HERMANN³,SCHMIDT MATTHIAS G. W.¹

Affiliation:

1. Potsdam Institute for Climate Impact Research, 14412 Potsdam, Germany

2. Environmental Change Institute, School of Geography and the Environment, University of Oxford, South Parks Road, Oxford, OX1 3QY, UK

3. University of Hamburg & KlimaCampus Hamburg, Bundesstr. 55, 20146 Hamburg, Germany

Abstract

We investigate the importance of explicitly accounting for uncertainty in the determination of optimal global climate policy. We demonstrate that the marginal risk premium determines the importance of adapting the optimal policy to uncertainty. Common integrated assessment models (IAM) of climate change suggest uncertainty has little effect because the marginal risk premium in these models is small. A rigorous investigation of the marginal risk premium and the marginal functional relationships within IAMs allows understanding the non-significance of (thin-tailed) uncertainty as a result of compensating factors in the climate cause-effect chain.

Publisher

World Scientific Pub Co Pte Lt

Subject

Management, Monitoring, Policy and Law,Economics and Econometrics,Global and Planetary Change

Link

https://www.worldscientific.com/doi/pdf/10.1142/S2010007812500042

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