An abrupt stochastic damage function to analyse climate policy benefits

Minh Ha-Duong and Patrice Dumas

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Abstract: This paper studies uncertainty about the non-linearity of climate change impact. The DIAM 2.3 model is used to compute the sensitivity of optimal CO2 emissions paths with respect to damage function parameters. This builds upon results of the EMF-14 uncertainty subgroup study by explicitly allowing for the possibility of threshold effects and hockey stick damage functions. It also extends to the cost-benefits framework previous studies about inertia of energy systems. Results show that the existence of a threshold in the damage function is critical to precautionary action. Optimal path are much less sensitive to uncertainty on the scale of the damages than on the threshold values.

Keywords: Changement climatique; modélisation intégrée (search for similar items in EconPapers)
Date: 2004-08-04
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00002451v1
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Published in The coupling of climate and economic dynamics. Essays on Integrated Assessment, ed. by Alain Haurie and Laurent Viguier, 22, Springer, 2004, Advances in Global Change Research

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