Rossella bargiacchi contact r bargiacchi@uvt nl
This presentation is the property of its rightful owner.
Sponsored Links
1 / 15

Rossella Bargiacchi Contact: [email protected] PowerPoint PPT Presentation


  • 88 Views
  • Uploaded on
  • Presentation posted in: General

Climate Change Scenarios and the Precautionary Principle Forthcoming in: Risk and Uncertainty in Environmental and Resource Economics , J.Wesseler, H.P.Weikard and R.Weaver eds., Edward Elgar. Rossella Bargiacchi Contact: [email protected]

Download Presentation

Rossella Bargiacchi Contact: [email protected]

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Rossella bargiacchi contact r bargiacchi@uvt nl

ClimateChange Scenarios and the Precautionary PrincipleForthcoming in: Risk and Uncertainty in Environmental and Resource Economics, J.Wesseler, H.P.Weikard and R.Weaver eds., Edward Elgar

Rossella Bargiacchi

Contact: [email protected]

Rossella Bargiacchi


Climate change scenarios and the precautionary principle

Climate Change Scenarios and the Precautionary Principle

  • Preliminary considerations:

    • Climate change is real ( ? )

    • Emission reduction is the only possibility for prevention

      • (alternative: artificial carbon sinks - not operative, to my knowledge)

    • The relations between emissions, climate change, and economic damage are uncertain and may be discontinuous (thresholds)

    • Emission reduction is costly

Rossella Bargiacchi


Climate change scenarios and the precautionary principle1

Climate Change Scenarios and the Precautionary Principle

  • Research questions:

    • What is the optimal level of emission reduction?

    • Are decision makers likely to achieve such level in reality?

Rossella Bargiacchi


Climate change scenarios and the precautionary principle2

Climate Change Scenarios and the Precautionary Principle

  • Structure of presentation:

    • Introduction and characterization of scenarios

    • Derivation of a utility function within a scenario

    • Models of choice of optimal emission levels

    • Simulations and results

    • Conclusions

Rossella Bargiacchi


Climate change scenarios and the precautionary principle3

Climate Change Scenarios and the Precautionary Principle

  • Scenarios are descriptions of possible future developments of a set of variables (demographic, economic, and environmental variables)

  • => treat scenarios as special states of the world, each representing some combination of hypotheses about interactions between climate and economy

Rossella Bargiacchi


Climate change scenarios and the precautionary principle4

Utility within a scenario presents thresholds:

Climate Change Scenarios and the Precautionary Principle

Rossella Bargiacchi


Climate change scenarios and the precautionary principle5

1-l2(α)

1-l1(α) =1-l3(α)

Climate Change Scenarios and the Precautionary Principle

Rossella Bargiacchi


Climate change scenarios and the precautionary principle6

Climate Change Scenarios and the Precautionary Principle

  • Models of choice in the face of uncertainty

    • Rationality benchmark: Expected Utility theory (EU)

    • Descriptive benchmark: Rank Dependent Utility theory (RDU) with inverse-S shaped transformation function

    • Proposed model: RDU with convex weighting function

Rossella Bargiacchi


Climate change scenarios and the precautionary principle7

Climate Change Scenarios and the Precautionary Principle

  • In 1992 the United Nations stated the so-called Precautionary Principle:

    «In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.»

Rossella Bargiacchi


Climate change scenarios and the precautionary principle8

Climate Change Scenarios and the Precautionary Principle

  • Precaution is “an action done to avoid possible danger”: we should pay attention to the worse outcomes

  • Rank Dependent Utility (RDU) with convex transformation function systematically attaches more weight to worse outcomes

  • => use RDU to implement the Precautionary Principle

Rossella Bargiacchi


Climate change scenarios and the precautionary principle9

Climate Change Scenarios and the Precautionary Principle

  • Results

    • Proposition 1For givenπ(B), and for convex weighting functions, an individual that maximizes RDU always chooses a level of consumption non-larger than an individual that maximizes EU

Rossella Bargiacchi


Rossella bargiacchi contact r bargiacchi uvt nl

Rossella Bargiacchi


Climate change scenarios and the precautionary principle10

Climate Change Scenarios and the Precautionary Principle

  • For more general assumptions no general results can be derived.

Rossella Bargiacchi


Climate change scenarios and the precautionary principle11

Climate Change Scenarios and the Precautionary Principle

  • Numerical simulations with pseudo-randomly chosen parameters show that:

    • RDU with convex weights leads to higher emissions than EU for 12% of generated parameters combinations

    • RDU with inverse-S shaped weights leads to higher emissions than EU for 31% of generated parameters combinations

Rossella Bargiacchi


Climate change scenarios and the precautionary principle12

Climate Change Scenarios and the Precautionary Principle

  • Conclusions

    • The precautionary principle implies sensitivity to physical parameters (here B and α), not just to economic assumptions

    • Prudent behavior can lead to higher emission levels than EU would predict

    • Inverse-S shaped decision makers are likely to choose too high emission levels: it is relevant to understand how actual policy makers behave in the face of uncertainty

Rossella Bargiacchi


  • Login