Uncertainty and Insurance in Endogenous Climate Change

Georg Müller-Fürstenberger and Ingmar Schumacher

No 2009-02, Research Papers in Economics from University of Trier, Department of Economics

Abstract: We investigate the economic impact of stochastic endogenous extreme events and insurance in a growth model. Our analytical results and computational experiments show that i) transparency of the insurance sector is the decisive requisite for abatement activities, implying substantial policy opportunities; ii) we can fully characterize and quantify the impact of uncertainty on the social planner's decisions; iii) a decentralized economy will under-invest in abatement without adequate policy interventions; iv) precautionary beliefs on the frequency of extreme events lead to more sustainability; v) technical change does not change the ordering of the paths but leads to a more sustainable future; v) a social security system which prices insurance fairly is preferable to an insurance industry which provides insurance with an overhead.

Keywords: economic growth; climate change; insurance; integrated assessment; extreme events; catastrophes (search for similar items in EconPapers)
JEL-codes: O1 Q5 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.uni-trier.de/fileadmin/fb4/prof/VWL/EWF/Research_Papers/2009-02.pdf First version, 2009 (application/pdf)

Related works:
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:trr:wpaper:200902

Access Statistics for this paper

More papers in Research Papers in Economics from University of Trier, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Matthias Neuenkirch ().