Uncertain climate thresholds and optimal economic growth

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

Research output: Contribution to journalArticlepeer-review

166 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 languageEnglish (US)
Pages (from-to)723-741
Number of pages19
JournalJournal of Environmental Economics and Management
Volume48
Issue number1
DOIs
StatePublished - Jul 2004

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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