Endogenous growth, convexity of damage and climate risk: how Nordhaus’ framework supports deep cuts in carbon emissions

Simon Dietz and Nicholas Stern

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: ‘To slow or not to slow’ (Nordhaus, 1991) was the first economic appraisal of greenhouse gas emissions abatement and founded a large literature on a topic of worldwide importance. We offer our assessment of the original article and trace its legacy, in particular Nordhaus's later series of ‘DICE’ models. From this work, many have drawn the conclusion that an efficient global emissions abatement policy comprises modest and modestly increasing controls. We use DICE itself to provide an initial illustration that, if the analysis is extended to take more strongly into account three essential elements of the climate problem – the endogeneity of growth, the convexity of damage and climate risk – optimal policy comprises strong controls. Nordhaus, W.D. (1991). ‘To slow or not to slow: the economics of the greenhouse effect’, Economic Journal, vol. 101(407), pp. 920–37.

Keywords: climate change; climate sensitivity; damage fuction; endogenous growth; integrated assesment (search for similar items in EconPapers)
JEL-codes: Q54 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2015-03
New Economics Papers: this item is included in nep-ene, nep-env and nep-gro
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Citations: View citations in EconPapers (186)

Published in The Economic Journal, March, 2015, 125(583), pp. 574 - 620. ISSN: 0013-0133

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