| Authors |
Brock, W. and Xepapadeas, A. |
| Title |
Regional Climate Policy under Deep Uncertainty |
| Abstract |
We study climate change policies by using the novel pattern scaling
approach of regional transient climate response to develop an economyclimate
model under conditions of deep uncertainty associated with:
(i) temperature dynamics, (ii) regional climate change damages, and
(iii) policy in the form of carbon taxes. We analyze both cooperative
and noncooperative outcomes in a regional model. Under deep uncertainty,
robust control policies are more conservative regarding emissions,
the higher the aversion to ambiguity, while damage uncertainty
seems to produce more conservative behavior than climate dynamics
uncertainty. Cooperative policies tend to be more conservative than
noncooperative policies for similar concerns about uncertainty but, as
concerns about uncertainty increase, policies tend to move closer to
each other. Asymmetries in concerns about uncertainty tend to produce
large deviations in regional emissions policy at the noncooperative
solution. If aversion to ambiguity is sufficiently high, optimal regulation
aiming to attain a cooperative steady state or a steady state that
satisfies conditions for a Nash equilibrium might not be possible. The
result is associated with the existence of regional hot spots and temperature
spillovers across regions, a situation which emerges in the real
world. In such cases, deep uncertainty about the impacts of climate
change makes robust regulation infeasible. |
| Creation Date |
2019-01-26 |
| Keywords |
Regional climate change policy, Regional temperature anomalies, Deep uncertainty, Robust control, Cooperative and noncooperative solutions. |
| Classification JEL |
Q54, Q58, D81 |
| File |
Regional.Climate.Policy.under.Deep.Uncertainty.pdf (803574 bytes) |
| File-Function |
First version |
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Copyright © 2009 [D.I.E.S.S. A.U.E.B.]. All rights reserved.
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