Econ 131 lecture 10

Econ 131 lecture 10 - Reading, Schedule Today: Climate...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Reading, Schedule Today: Climate change economics Thursday: Climate agreements, start transportation section Reading: Currently through Chapter 10, Chapter 11 at the end of next week Problem set 4 now on TED, due 11/9 Before the midterm Current evidence of greenhouse gas emissions, warming, and some of the possible damages Today: More on expected damages: adding all of them together gives us the beneFts of abatement today Costs of abatement come from reduced current consumption, particularly of energy intensive goods, and switches to cleaner (but more expensive) energy technologies
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Market Impacts -- effects on production and costs in: Agriculture Forestry Energy Other sectors? Non-Market Impacts Ecosystem function, species viability General comfort Non-market health impacts Migration Political stability Measuring Economic Damages (i.e. total bene±t of abatement) Source: Mendelsohn, 2001, GIM 2.0 IAM Why (+)?
Background image of page 2
Estimated Non-Market Damages (services only -- doesn’t include existence value) Market and Non-market combined: The social cost (“MD”) per ton CO 2 emitted 12% negative, (B) the median, 20% > $75
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Economically EfFcient Response Abatement of Emissions CO 2 and other greenhouse gasses Adaptation ±or example, air conditioning and sea walls Both are costly, need to maximize net beneFts Typically assume adaptation always takes place to the optimal level Then we compare marginal costs of abatement with marginal avoided damages (post-adaptation) Example Assume the only effect of climate change is sea level rise (SLR), all costs/beneFts given in present value: Damage from SLR: city destroyed, present value $500 billion Cost of CO2 abatement: $20 billion Does abatement pass a cost-beneFt test? Suppose a perfect adaptation (sea wall) costs $15 billion Does abatement still pass a cost-beneFt test? Explain.
Background image of page 4
Compares costs and benefts and proposes an “X*” For the world. Prepared in 2006 For the British government, argues For large amounts oF abatement “...risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the Frst half of the 20th century.” “If we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more.” “In contrast, the costs of action – reducing greenhouse gas emissions to avoid the worst impacts of climate change – can be limited to around 1% of global GDP each year.” The Stern Review Exactly How Much to Abate? Study the benefts (i.e. avoiding the damages above),
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 14

Econ 131 lecture 10 - Reading, Schedule Today: Climate...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online