Carbon Dioxide as a Risky Asset

Adam Michael Bauer (), Cristian Proistosescu and Gernot Wagner
Additional contact information
Adam Michael Bauer: University of Illinois Urbana-Champaign
Cristian Proistosescu: University of Illinois Urbana-Champaign
Gernot Wagner: Columbia Business School

Climatic Change, 2024, vol. 177, issue 5, No 1, 27 pages

Abstract: Abstract We develop a financial-economic model for carbon pricing with an explicit representation of decision making under risk and uncertainty that is consistent with the Intergovernmental Panel on Climate Change’s sixth assessment report. We show that risk associated with high damages in the long term leads to stringent mitigation of carbon dioxide emissions in the near term, and find that this approach provides economic support for stringent warming targets across a variety of specifications. Our results provide insight into how a systematic incorporation of climate-related risk influences optimal emissions abatement pathways.

Keywords: Climate risk; Climate policy; Asset pricing; Cost of carbon (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10584-024-03724-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:climat:v:177:y:2024:i:5:d:10.1007_s10584-024-03724-3

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/10584

DOI: 10.1007/s10584-024-03724-3

Access Statistics for this article

Climatic Change is currently edited by M. Oppenheimer and G. Yohe

More articles in Climatic Change from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().