The Economics of Climate Change
Lawrence H. Goulder
Stanford University - Department of Economics; National Bureau of Economic Research (NBER); Resources for the Future
William A. Pizer
New Palgrave Dictionary of Economics, 2nd Edition, Macmillan Publishing, Ltd.
Global climate change poses a threat to the well-being of humans and other living things through impacts on ecosystem functioning, biodiversity, capital productivity, and human health. This paper briefly surveys recent research on the economics of climate change, including theoretical insights and empirical findings that offer guidance to policy makers. Section 1 frames the climate change problem and identifies ways that economic research can address it. Section 2 describes approaches to measuring the benefits and costs associated with reducing greenhouse gas emissions. In Section 3 we discuss the implications of uncertainty for the timing and stringency of policies to address possible climate change. We then present issues related to policy design, including instrument choice (Section 4), flexibility (Section 5), and international coordination (Section 6). The final section offers general conclusions.
Number of Pages in PDF File: 13
Keywords: Climate change, environmental policy, greenhouse gases, externalities
JEL Classification: D62, H23, N50, Q20
Date posted: December 13, 2005