Is There Space for Agreement on Climate Change? A Non-Parametric Approach to Policy Evaluation

Centre for Climate Change Economics and Policy Working Paper 152

Grantham Research Institute on Climate Change and the Environment Working Paper 136

30 Pages Posted: 22 Oct 2013

See all articles by Simon Dietz

Simon Dietz

London School of Economics - Grantham Research Institute on Climate Change and the Environment and Department of Geography and Environment

Nicoleta Matei

Joint Research Centre (JRC), European Commission; University of Verona - Department of Economics

Date Written: October 22, 2013

Abstract

Economic evaluation of climate policy is notoriously dependent on assumptions about time and risk preferences, since reducing greenhouse gas emissions today has a highly uncertain pay-off, far into the future. These assumptions have always been much debated. Rather than occupy a position in this debate, we take a non-parametric approach here, based on the concept of Time-Stochastic Dominance. Using an integrated assessment model, we apply Time-Stochastic Dominance analysis to climate change, asking are there global emissions abatement targets that everyone who shares a broad class of time and risk preferences would agree to prefer? Overall we find that even tough emissions targets would be chosen by almost everyone, barring those with arguably 'extreme' preferences.

Keywords: almost stochastic dominance, climate change, discounting, integrated assessment, risk aversion, stochastic dominance, time dominance, time-stochastic dominance

JEL Classification: Q54

Suggested Citation

Dietz, Simon and Matei, Nicoleta and Matei, Nicoleta, Is There Space for Agreement on Climate Change? A Non-Parametric Approach to Policy Evaluation (October 22, 2013). Centre for Climate Change Economics and Policy Working Paper 152, Grantham Research Institute on Climate Change and the Environment Working Paper 136, Available at SSRN: https://ssrn.com/abstract=2343524 or http://dx.doi.org/10.2139/ssrn.2343524

Simon Dietz (Contact Author)

London School of Economics - Grantham Research Institute on Climate Change and the Environment and Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/dietzs

Nicoleta Matei

Joint Research Centre (JRC), European Commission ( email )

Edificio Expo, C
Inca Garcilaso, s/n
Sevilla, E-41092
Spain

University of Verona - Department of Economics ( email )

Via dell'Artigliere, 8
37129 Verona
Italy

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