GHG Targets as Insurance Against Catastrophic Climate Damages

Martin Weitzman

No 16136, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A critical issue in climate-change economics is the specification of the so-called "damages function" and its interaction with the unknown uncertainty of catastrophic outcomes. This paper asks how much we might be misled by our economic assessment of climate change when we employ a conventional quadratic damages function and/or a thin-tailed probability distribution for extreme temperatures. The paper gives some numerical examples of the indirect value of various GHG concentration targets as insurance against catastrophic climate-change temperatures and damages. These numerical examples suggest that we might be underestimating considerably the welfare losses from uncertainty by using a quadratic damages function and/or a thin-tailed temperature distribution. In these examples, the primary reason for keeping GHG levels down is to insure against high-temperature catastrophic climate risks.

JEL-codes: Q5 Q54 (search for similar items in EconPapers)
Date: 2010-06
Note: EEE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Published as Martin L. Weitzman, 2012. "GHG Targets as Insurance Against Catastrophic Climate Damages," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(2), pages 221-244, 03.

Downloads: (external link)
http://www.nber.org/papers/w16136.pdf (application/pdf)

Related works:
Journal Article: GHG Targets as Insurance Against Catastrophic Climate Damages (2012)
Working Paper: GHG Targets as Insurance Against Catastrophic Climate Damages (2012)
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:nbr:nberwo:16136

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16136

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().