Comparing Alternative Policies Against Environmental Catastrophes

Timothy Besley and Avinash Dixit

No 11802, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We construct a model with three features important in the context of major environmental catastrophes: (1) the distribution of possible damage has a fat tail, (2) the probability of the catastrophic event increases as greenhouse gases accumulate, (3) a technological solution may emerge making conservation efforts unnecessary. We solve the model numerically for plausible values of the parameters, and evaluate the tradeoffs between alternative policies such as prevention, mitigation, and technological fixes.

Keywords: Climate change; Catastrophic risk (search for similar items in EconPapers)
JEL-codes: Q50 Q54 Q58 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (1)

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