Uncertain climate change in an intergenerational planning model

Asbjørn Torvanger

Environmental & Resource Economics, 1997, vol. 9, issue 1, 103-124

Abstract: A three-generation planning model incorporating uncertain climate change is developed. Each generation features a production activity based on capital and an exhaustible resource. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The model is solved by stochastic dynamic programming. If the climate impact and climate change probability is constant, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability. If, however, climate impact and climate change probability increases with increased aggregate resource use, this result is reversed. Copyright Kluwer Academic Publishers 1997

Keywords: climate change; uncertainty; irreversibility; intergenerational; stochastic dynamic programming; resource extraction (search for similar items in EconPapers)
Date: 1997
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DOI: 10.1007/BF02441372

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