Infinite uncertainty, forgotten feedbacks, and cost-benefit analysis of climate policy

R.S.J. Tol, G.W. Yohe

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Tol (2003) questioned the applicability of expected cost-benefit analysis to global mitigation policy when he found evidence that the uncertainty surrounding estimates of the marginal damage of climate change could be infinite even if total damages were finite. Yohe (2003) suggested that this problem could be alleviated if international development aid were directed at eliminating the source of the problem - climate induced negative growth rates in a few regions along a handful of troublesome scenarios. The hypothesis about adding a second policy lever to the climate policy calculus is shown to hold, though perhaps not as robustly as originally thought. A portfolio of international policies with at least two independent tools can avoid infinite uncertainty on the margins and the associated implications for global mitigation policy at a reasonable price even in the relatively unlikely event that climate change causes negative economic growth in a region or two. © 2007 Springer Science+Business Media B.V.
Original languageEnglish
Pages (from-to)429-442
Number of pages13
JournalClimatic Change
Volume83
DOIs
Publication statusPublished - 2007

Fingerprint

cost-benefit analysis
environmental policy
mitigation
development aid
damage
climate change
economic growth
policy
climate

Cite this

@article{1508ff9dbb3049b4aa5702cbd62f2a18,
title = "Infinite uncertainty, forgotten feedbacks, and cost-benefit analysis of climate policy",
abstract = "Tol (2003) questioned the applicability of expected cost-benefit analysis to global mitigation policy when he found evidence that the uncertainty surrounding estimates of the marginal damage of climate change could be infinite even if total damages were finite. Yohe (2003) suggested that this problem could be alleviated if international development aid were directed at eliminating the source of the problem - climate induced negative growth rates in a few regions along a handful of troublesome scenarios. The hypothesis about adding a second policy lever to the climate policy calculus is shown to hold, though perhaps not as robustly as originally thought. A portfolio of international policies with at least two independent tools can avoid infinite uncertainty on the margins and the associated implications for global mitigation policy at a reasonable price even in the relatively unlikely event that climate change causes negative economic growth in a region or two. {\circledC} 2007 Springer Science+Business Media B.V.",
author = "R.S.J. Tol and G.W. Yohe",
year = "2007",
doi = "10.1007/s10584-007-9258-z",
language = "English",
volume = "83",
pages = "429--442",
journal = "Climatic Change",
issn = "0165-0009",
publisher = "Springer Verlag",

}

Infinite uncertainty, forgotten feedbacks, and cost-benefit analysis of climate policy. / Tol, R.S.J.; Yohe, G.W.

In: Climatic Change, Vol. 83, 2007, p. 429-442.

Research output: Contribution to JournalArticleAcademicpeer-review

TY - JOUR

T1 - Infinite uncertainty, forgotten feedbacks, and cost-benefit analysis of climate policy

AU - Tol, R.S.J.

AU - Yohe, G.W.

PY - 2007

Y1 - 2007

N2 - Tol (2003) questioned the applicability of expected cost-benefit analysis to global mitigation policy when he found evidence that the uncertainty surrounding estimates of the marginal damage of climate change could be infinite even if total damages were finite. Yohe (2003) suggested that this problem could be alleviated if international development aid were directed at eliminating the source of the problem - climate induced negative growth rates in a few regions along a handful of troublesome scenarios. The hypothesis about adding a second policy lever to the climate policy calculus is shown to hold, though perhaps not as robustly as originally thought. A portfolio of international policies with at least two independent tools can avoid infinite uncertainty on the margins and the associated implications for global mitigation policy at a reasonable price even in the relatively unlikely event that climate change causes negative economic growth in a region or two. © 2007 Springer Science+Business Media B.V.

AB - Tol (2003) questioned the applicability of expected cost-benefit analysis to global mitigation policy when he found evidence that the uncertainty surrounding estimates of the marginal damage of climate change could be infinite even if total damages were finite. Yohe (2003) suggested that this problem could be alleviated if international development aid were directed at eliminating the source of the problem - climate induced negative growth rates in a few regions along a handful of troublesome scenarios. The hypothesis about adding a second policy lever to the climate policy calculus is shown to hold, though perhaps not as robustly as originally thought. A portfolio of international policies with at least two independent tools can avoid infinite uncertainty on the margins and the associated implications for global mitigation policy at a reasonable price even in the relatively unlikely event that climate change causes negative economic growth in a region or two. © 2007 Springer Science+Business Media B.V.

U2 - 10.1007/s10584-007-9258-z

DO - 10.1007/s10584-007-9258-z

M3 - Article

VL - 83

SP - 429

EP - 442

JO - Climatic Change

JF - Climatic Change

SN - 0165-0009

ER -