The value of information for integrated assessment models of climate change

Stephen Newbold () and Alex Marten

Journal of Environmental Economics and Management, 2014, vol. 68, issue 1, 111-123

Abstract: We estimate the value of information (VOI) for three key parameters of climate integrated assessment models (IAMs): marginal damages at low temperature anomalies, marginal damages at high temperature anomalies, and equilibrium climate sensitivity. Most empirical studies of climate damages have examined temperature anomalies up to 3°C, while some recent theoretical studies emphasize the risks of “climate catastrophes,” which depend on climate sensitivity and on marginal damages at higher temperature anomalies. We use a new IAM to estimate the VOI for each parameter over a range of assumed levels of study precision based on prior probability distributions calibrated using results from previous studies. We measure the VOI as the maximum fixed fraction of consumption that a social planner would be willing to pay to conduct a new study before setting a carbon tax. Our central results suggest that the VOI is greatest for marginal damages at high temperature anomalies.

Keywords: Climate change; Integrated assessment model; Value of information; Uncertainty; Climate sensitivity (search for similar items in EconPapers)
JEL-codes: Q51 Q54 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:68:y:2014:i:1:p:111-123

DOI: 10.1016/j.jeem.2014.01.002

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