Pricing Uncertainty Induced by Climate Change

• 成果类型: Article
• 署名作者: Barnett, Michael; Brock, William; Hansen, Lars Peter
• 署名单位: Arizona State University; Arizona State University-Tempe; University of Wisconsin System; University of Wisconsin Madison; University of Missouri System; University of Missouri Columbia; University of Chicago
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhz144
• 发表日期: 2020
• 页码: 1024
• 关键词: TIPPING POINTS; ROBUST-CONTROL; temperature; GROWTH; MODEL; RISK; mitigation; RESOLUTION; emissions; cost

摘要

Geophysicists examine and document the repercussions for the earth's climate induced by alternative emission scenarios and model specifications. Using simplified approximations, they produce tractable characterizations of the associated uncertainty. Meanwhile, economists write highly stylized damage functions to speculate about how climate change alters macroeconomic and growth opportunities. How can we assess both climate and emissions impacts, as well as uncertainty in the broadest sense, in social decision-making? We provide a framework for answering this question by embracing recent decision theory and tools from asset pricing, and we apply this structure with its interacting components to a revealing quantitative illustration.