Spatially Structured Deep Uncertainty, Robust Control, and Climate Change Policies

Anastasios Xepapadeas and Athanasios Yannacopoulos

No 1807, DEOS Working Papers from Athens University of Economics and Business

Abstract: In view of the ambiguities and the deep uncertainty associated with climate change, we study the features of climate change policies that account for spatially structured ambiguity. Ambiguity related to the evolution of the damages from climate change is introduced into a coupled economy-climate model with explicit spatial structure due to heat transport across the globe. We seek to answer questions about how spatial robust regulation regarding climate policies can be formulated; what the potential links of this regulation to the weak and strong version of the precautionary principle (PP) are; and how insights about whether it is costly to follow a PP can be obtained. We also study the emergence of hot spots, which are locations where local deep uncertainty may cause robust regulation to break down for the whole spatial domain.

Keywords: Climate change; ambiguity; robust control; spatial regulation (search for similar items in EconPapers)
JEL-codes: C61 D81 Q54 R11 (search for similar items in EconPapers)
Date: 2018-03-27
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:aue:wpaper:1807

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