The curious role of "learning" in climate policy

Should we wait for more data?

Research output: Contribution to specialist publicationArticle

56 Citations (Scopus)

Abstract

Given the large uncertainties regarding potential damages from climate change and the significant but also uncertain costs of reducing greenhouse emissions, the debate over a policy response is often framed as a choice of acting now or waiting until the uncertainty is reduced. Implicit in the "wait to learn" argument is the notion that the ability to learn in the future necessarily implies that less restrictive policies should be chosen in the near term. I demonstrate in the general case that the ability to learn in the future can lead to either less restrictive or more restrictive policies today. I also show that the initial decision made under uncertainty will be affected by future learning only if the actions taken today change the marginal costs or marginal damages in the future. Results from an intermediate-scale integrated model of climate and economics indicate that the choice of current emissions restrictions is independent of whether or not uncertainty is resolved before future decisions, because, like most models, the cross-period interactions are minimal. With stronger interactions, the effect of learning on initial period decisions can be more important.

Original languageEnglish (US)
Pages97-119
Number of pages23
Volume23
No2
Specialist publicationEnergy Journal
DOIs
StatePublished - Jan 1 2002

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Greenhouses
Climate change
Costs
Economics
Uncertainty
Climate policy
Interaction
Damage
Policy responses
Climate
Marginal cost
Integrated model

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Energy(all)

Cite this

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abstract = "Given the large uncertainties regarding potential damages from climate change and the significant but also uncertain costs of reducing greenhouse emissions, the debate over a policy response is often framed as a choice of acting now or waiting until the uncertainty is reduced. Implicit in the {"}wait to learn{"} argument is the notion that the ability to learn in the future necessarily implies that less restrictive policies should be chosen in the near term. I demonstrate in the general case that the ability to learn in the future can lead to either less restrictive or more restrictive policies today. I also show that the initial decision made under uncertainty will be affected by future learning only if the actions taken today change the marginal costs or marginal damages in the future. Results from an intermediate-scale integrated model of climate and economics indicate that the choice of current emissions restrictions is independent of whether or not uncertainty is resolved before future decisions, because, like most models, the cross-period interactions are minimal. With stronger interactions, the effect of learning on initial period decisions can be more important.",
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The curious role of "learning" in climate policy : Should we wait for more data? / Webster, Mort D.

In: Energy Journal, Vol. 23, No. 2, 01.01.2002, p. 97-119.

Research output: Contribution to specialist publicationArticle

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