Uncertain climate thresholds and optimal economic growth

Klaus Keller; Benjamin M. Bolker; David F. Bradford

doi:10.1016/j.jeem.2003.10.003

Uncertain climate thresholds and optimal economic growth

Klaus Keller
, Benjamin M. Bolker
, David F. Bradford

Research output: Contribution to journal › Article › peer-review

192 Scopus citations

Abstract

We explore the combined effects of a climate threshold (a potential ocean thermohaline circulation collapse), parameter uncertainty, and learning in an optimal economic growth model. Our analysis shows that significantly reducing carbon dioxide (CO₂) emissions may be justified to avoid or delay even small (and arguably realistic) damages from an uncertain and irreversible climate change - even when future learning about the system is considered. Parameter uncertainty about the threshold specific damages and the CO ₂ level triggering a threshold can act to decrease near-term CO ₂ abatements that maximize expected utility.

Original language	English (US)
Pages (from-to)	723-741
Number of pages	19
Journal	Journal of Environmental Economics and Management
Volume	48
Issue number	1
DOIs	https://doi.org/10.1016/j.jeem.2003.10.003
State	Published - Jul 2004

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth
SDG 13 Climate Action

All Science Journal Classification (ASJC) codes

Economics and Econometrics
Management, Monitoring, Policy and Law

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10.1016/j.jeem.2003.10.003

Cite this

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title = "Uncertain climate thresholds and optimal economic growth",

abstract = "We explore the combined effects of a climate threshold (a potential ocean thermohaline circulation collapse), parameter uncertainty, and learning in an optimal economic growth model. Our analysis shows that significantly reducing carbon dioxide (CO2) emissions may be justified to avoid or delay even small (and arguably realistic) damages from an uncertain and irreversible climate change - even when future learning about the system is considered. Parameter uncertainty about the threshold specific damages and the CO 2 level triggering a threshold can act to decrease near-term CO 2 abatements that maximize expected utility.",

author = "Klaus Keller and Bolker, \{Benjamin M.\} and Bradford, \{David F.\}",

note = "Funding Information: We thank the participants of the Yale/NBER/IIASA workshop on potential catastrophic impacts of climate change for helpful comments on an earlier version of this paper. We are especially grateful to H. Dowlatabadi, H.D. Jacoby, E. Naevdal, W.D. Nordhaus, R. Mendelsohn, F.M.M. Morel, C.D. Kolstad, and R.S.J. Tol for helpful discussions. The comments of Dr. Deacon, as well as two anonymous reviewers improved the presentation. Financial support from the Princeton Environmental Institute, the Carbon Mitigation Initiative at Princeton University, and the Environmental Consortium at the Pennsylvania State University is gratefully acknowledged. Special thanks go to Dr. Herriges for excellent editorial handling. Any remaining mistakes are solely the responsibility of the authors. ",

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AU - Bolker, Benjamin M.

AU - Bradford, David F.

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AB - We explore the combined effects of a climate threshold (a potential ocean thermohaline circulation collapse), parameter uncertainty, and learning in an optimal economic growth model. Our analysis shows that significantly reducing carbon dioxide (CO2) emissions may be justified to avoid or delay even small (and arguably realistic) damages from an uncertain and irreversible climate change - even when future learning about the system is considered. Parameter uncertainty about the threshold specific damages and the CO 2 level triggering a threshold can act to decrease near-term CO 2 abatements that maximize expected utility.

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Uncertain climate thresholds and optimal economic growth

Abstract

UN SDGs

All Science Journal Classification (ASJC) codes

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