Managing Climate Change Under Uncertainty: Recursive Integrated Assessment at an Inflection Point
Lemoine, D. and I. Rudik, Managing Climate Change Under Uncertainty: Recursive Integrated Assessment at an Inflection Point. Annu. Rev. Res. Econ. 9, 2017, DOI: 10.1146/annurev-resource-100516-053516
48 Pages Posted: 1 Nov 2016 Last revised: 24 Mar 2017
Date Written: February 9, 2017
Uncertainty is critical to questions about climate change policy. Recently developed recursive integrated assessment models have become the primary tools for studying and quantifying the policy implications of uncertainty. We decompose the channels through which uncertainty affects policy and quantify them in a recursive extension of a benchmark integrated assessment model. The first wave of recursive models has made valuable, pioneering efforts at analyzing disparate sources of uncertainty. We argue that frontier numerical methods will enable the next generation of recursive models to better capture the information structure of climate change and to thereby ask new types of questions about climate change policy.
Keywords: dynamic programming, insurance, learning, precaution, prudence, uncertainty
JEL Classification: C61, D91, H23, Q54, Q58
Suggested Citation: Suggested Citation