Global Warming and a Potential Tipping Point in the Atlantic Thermohaline Circulation: The Role of Risk Aversion

Mariia Belaia (), Michael Funke and Nicole Glanemann

No 4930, CESifo Working Paper Series from CESifo

Abstract: Common integrated assessment models produce the counterintuitive result that higher risk aversion does not lead to stronger near-term abatement. This paper re-examines this result with a DICE model that is fully coupled with a thermohaline circulation model. It also features Epstein-Zin utility and uncertainty about climate sensitivity that resolves after some time. The simulations show that aversion to this tipping point risk has little effect. For climate sensitivity of realistic magnitude, a collapse of the circulation occurs in the distant future, which allows acting after learning. Furthermore, the anticipated damage costs are not sufficiently great to justify precautionary measures.

Keywords: integrated assessment modeling; risk aversion; Epstein-Zin utility; DICE; thermohaline circulation; climate sensitivity; uncertainty (search for similar items in EconPapers)
JEL-codes: C61 C63 Q54 Q56 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Global Warming and a Potential Tipping Point in the Atlantic Thermohaline Circulation: The Role of Risk Aversion (2017)
Working Paper: Global Warming and a Potential Tipping Point in the Atlantic Thermohaline Circulation: The Role of Risk Aversion (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4930

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