Untitled

Abstract

forthcoming in Environmental Modeling and Assessment special issue on "Modeling the economic response to global climate change"

Impacts of Natural Disasters on a Dynamic Economy

“…Applied to the specific issue of climate change, the results in this section highlight the importance of taking into account the presence of endogenous variability in assessing reconstruction costs in general, and the evolution of the economy through several EnBCs in particular. The inclusion of endogenous dynamics suggests that GDP losses may be larger than those obtained by the use of optimization strategies based on equilibrium models [e.g., Ambrosi et al, 2003;Nordhaus and Boyer , 1998;Stern, 2006]. Moreover, the allocation of capital between reconstruction and other types of investment after a large natural disaster can play an important role in both short-and long-term production losses.…”

Impacts of Natural Disasters on a Dynamic Economy

“…The inclusion of endogenous dynamics suggests that GDP losses may be larger than those obtained by the use of optimization strategies based on equilibrium models [e.g., Ambrosi et al, 2003;Nordhaus and Boyer , 1998;Stern, 2006]. Moreover, the allocation of capital between reconstruction and other types of investment after a large natural disaster can play an important role in both short-and long-term production losses.…”

“…Although these RCPs expedite climate modeling in parallel with the development of socio-economic and emission scenarios, the problems due to a lack of real feedbacks between the two systems -and to real communication between the research communities that study each of them separately [Wittgenstein, 2001;Hillerbrand and Ghil , 2008] -persist. There are several truly coupled "integrated assessment models" [e.g., Ambrosi et al, 2003;Nordhaus and Boyer , 1998;Stern, 2006], but they disregard variability and represent both climate and the economy as a succession of equilibrium states without endogenous dynamics.…”

Catastrophic climate change, population ethics and intergenerational equity

“…Most of the climate economics literature about catastrophes has modelled them as large drop in consumption: either as the certainty-equivalent loss of risky catastrophic damages (Nordhaus and Boyer, 2000), or as a sudden jump in climate damages when the temperature rises above a given temperature threshold (Ambrosi et al, 2003;Pottier et al, 2015), or through a power law damage function with a large exponent (Hope, 2006;Ackerman et al, 2010;Weitzman, 2012). 1 The case of human extinction is different, as it is an irreversible regime shift in the sense that post-catastrophe welfare is independent from pre-catastrophe actions.…”

“…2 In this paper, we explicitly account for the risk of extinction of future generations. We use the IAM RESPONSE (Ambrosi et al, 2003;Pottier et al, 2015), representing the interaction between climate and the economy, to assess the impacts of three scenarios (a business-as-usual case, a 2 • C and a 3 • C stabilisation policy) in terms of future consumption paths and extinction risk associated to climate change. We analyse the role of inequality aversion and population ethics for policy evaluation within the class of number-dampened utilitarian social welfare functions.…”