Managing Climate Change Under Uncertainty: Recursive Integrated Assessment at an Inflection Point

Date
2017-10-01
Authors
Lemoine, Derek
Rudik, Ivan
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Altmetrics
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Research Projects
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Economics
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Abstract

Uncertainty is critical to questions about climate change policy. Recently developed recursive integrated assessment models have become the primary tools for studying and quantifying the policy implications of uncertainty. We decompose the channels through which uncertainty affects policy and quantify them in a recursive extension of a benchmark integrated assessment model. The first wave of recursive models has made valuable, pioneering efforts at analyzing disparate sources of uncertainty. We argue that frontier numerical methods will enable the next generation of recursive models to better capture the information structure of climate change and to thereby ask new types of questions about climate change policy.

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This is a working paper of an article published as Lemoine, Derek, and Ivan Rudik. "Managing Climate Change Under Uncertainty: Recursive Integrated Assessment at an Inflection Point." Annual Review of Resource Economics 9 (2017): 117-142. doi:10.1146/annurev-resource-100516-053516. Posted with permission.

Keywords
dynamic programming, insurance, learning, precaution, prudence, uncertainty
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