Abstract

http://ssrn.com/abstract=1448683
 
 

References (40)



 
 

Citations (8)



 


 



Uncertain Outcomes and Climate Change Policy


Robert S. Pindyck


Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

August 6, 2009

MIT Sloan Research Paper No. 4742-09

Abstract:     
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*(τ) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limited to τ. 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*(τ) below 2%, even for small values of τ, unless one assumes extreme parameter values and/or substantial shifts in the temperature distribution. These results are consistent with moderate abatement policies.

Number of Pages in PDF File: 38

Keywords: Environmental policy, climate change, global warming, uncertainty, catastrophic outcomes

JEL Classification: Q5, Q54, D81

working papers series


Download This Paper

Date posted: August 16, 2009  

Suggested Citation

Pindyck, Robert S., Uncertain Outcomes and Climate Change Policy (August 6, 2009). MIT Sloan Research Paper No. 4742-09. Available at SSRN: http://ssrn.com/abstract=1448683 or http://dx.doi.org/10.2139/ssrn.1448683

Contact Information

Robert S. Pindyck (Contact Author)
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
50 Memorial Drive, E52-450
Cambridge, MA 02142
United States
617-253-6641 (Phone)
617-258-6855 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 4,331
Downloads: 133
Download Rank: 106,806
References:  40
Citations:  8

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.360 seconds