Mitigation under long-term growth uncertainty

Mitigation under long-term growth uncertainty: Growing emissions but outgrowing its consequences – Sure? / Svenn Jensen and Christian Traeger. UC Center for Energy and Environmental Economics, Aug. 2013, 49 p. (E3 WP-065)

http://are.berkeley.edu/~traeger/pdf/Jensen%20Traeger_Mitigation%20under%20Long-Term%20Growth%20Uncertainty.pdf

Authors’s abstract :
Economic growth over the coming centuries is one of the major determinants of today’s optimal greenhouse gas mitigation policy. At the same time, long-run economic growth is highly uncertain. This paper is the first to evaluate optimal mitigation policy under long-term growth uncertainty in a stochastic integrated assessment model of climate change. The sign and magnitude of the impact depend on preference characteristics and on how damages scale with production. We explain the different mechanisms driving optimal mitigation under certain growth, under uncertain technological progress in the discounted expected utility model, and under uncertain technological progress in a more comprehensive asset pricing model based on Epstein-Zin-Weil preferences. In the latter framework, the dominating uncertainty impact has the opposite sign of a deterministic growth impact; the sign switch results from an endogenous pessimism weighting. All of our numeric scenarios use a DICE based assessment model and find a higher optimal carbon tax than the deterministic DICE base case calibration.


Citer ce billet
Danièle Revel (2013, 11 septembre). Mitigation under long-term growth uncertainty. Veille énergie climat. Consulté le 27 mai 2024, à l’adresse https://doi.org/10.58079/oak0

Vous aimerez aussi...

Laisser un commentaire

Votre adresse e-mail ne sera pas publiée. Les champs obligatoires sont indiqués avec *

Ce site utilise Akismet pour réduire les indésirables. En savoir plus sur comment les données de vos commentaires sont utilisées.

Rechercher dans OpenEdition Search

Vous allez être redirigé vers OpenEdition Search