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Regional climate policy under deep uncertainty: robust control and distributional concerns

William Brock and Anastasios Xepapadeas ()

No 2009, DEOS Working Papers from Athens University of Economics and Business

Abstract: We study climate change policies using the novel pattern scaling approach of regional transient climate response in order to develop a regional economy-climate model under conditions of deep uncertainty. We associate welfare weights with regions and analyze cooperative outcomes derived by the social planner's solution at the regional scale. Recent literature indicates that damages are larger in low latitude (warmer) areas and are projected to become relatively even larger in low latitude areas than at temperate latitudes. Under deep uncertainty, robust control policies are more conservative regarding emissions and, when regional distributional weights are introduced, carbon taxes are lower in the relatively poorer region. Mild concerns for robustness are welfare improving for the poor region, while strong concerns have welfare cost for all regions. We show that increasing regional temperatures will increase resources devoted to learning, in order to reduce deep uncertainty.

Keywords: regional temperature anomalies; deep uncertainty; distributional weights; cost of robustness; learning (search for similar items in EconPapers)
JEL-codes: Q54 Q58 D81 (search for similar items in EconPapers)
Date: 2020-03-18
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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