Averting Catastrophes: The Strange Economics of Scylla and Charybdis

Robert Pindyck and Ian Martin

No 10730, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Faced with numerous potential catastrophes---nuclear and bioterrorism, mega-viruses, climate change, and others---which should society attempt to avert? A policy to avert one catastrophe considered in isolation might be evaluated in cost-benefit terms. But because society faces multiple catastrophes, simple cost-benefit analysis fails: Even if the benefit of averting each one exceeds the cost, we should not necessarily avert them all. We explore the policy interdependence of catastrophic events, and develop a rule for determining which catastrophes should be averted and which should not.

Keywords: Bioterrorism; Catastrophes; Catastrophic events; Climate change; Disasters; Epidemics; Nuclear terrorism; Pandemics; Policy objectives; Willingness to pay (search for similar items in EconPapers)
JEL-codes: D81 Q5 Q54 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (56)

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Related works:
Journal Article: Averting Catastrophes: The Strange Economics of Scylla and Charybdis (2015)
Working Paper: Averting catastrophes: the strange economics of Scylla and Charybdis (2015)
Working Paper: Averting Catastrophes: The Strange Economics of Scylla and Charybdis (2014)
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