Handbook of the economics of climate change / Lint Barrage and Solomon Hsiang.

Format:

Book

Author/Creator:

Barrage, Lint, author.

Hsiang, Solomon, author.

Series:

Handbooks in Economics Series

Handbook of the Economics of Climate Change Series ; Volume 1

Language:

English

Subjects (All):

Climatic changes--Economic aspects.

Climatic changes.

Physical Description:

1 online resource (505 pages)

Edition:

First edition.

Place of Publication:

Amsterdam, Netherlands : Elsevier, [2024]

Summary:

The new Handbook of the Economics of Climate Change Volume 1 provides readers from a broad range of backgrounds - including students, researchers, policy-makers, and practitioners - with a central reference for core elements the economics of climate change: Integrated Climate-Economic Modeling, Empirical Approaches to Climate Change Impact.

Contents:

Front Cover

Handbook of the Economics of Climate Change

Copyright

Contents

List of Contributors

Preface

References

Chapter 1: Introduction to integrated assessment modeling of climate change

1 Introduction

2 Anatomy of an IAM

2.1 Consumption and utility

2.2 Production and emissions

2.3 Climate

2.4 Damages

2.5 Optimization and comments on solving IAMs

3 The first generation of IAMs: conceptual development and results

3.1 Discounting

3.2 Uncertainty

3.3 Spatial inequality

3.4 Imperfect substitutability of environmental goods

3.5 Levels versus growth damages

3.6 Adaptation IAMs

3.7 Summary

4 Critiques of IAMs

5 Recent advances and how the field has evolved

5.1 Recursive IAMs

5.2 Analytical IAMs

5.3 Social-cost IAMs

5.4 Spatial IAMs

5.5 Short-run macroeconomic models with climate

5.6 Multi-sectoral general equilibrium models

6 Conclusions

Chapter 2: Empirical approaches to climate change impact quantification

2 Empirical estimates of the effect of climate change

2.1 Review of core empirical methodologies

2.1.1 Cross-sectional models

2.1.2 Panel models

2.1.2.1 Non-linear effects of weather

2.1.2.2 Heterogeneity across space and time

2.1.3 Long differences

2.1.4 Spatial first differences

2.2 Future projection of climate impacts

2.2.1 Calculating future impacts

2.2.2 Characterizing uncertainty

2.3 Estimating social cost of greenhouse gases

2.4 A reference guide to estimating climate impacts

2.4.1 Choosing a climate dataset

2.4.2 Aggregating climate data to administrative regions

2.4.3 Estimating the nonlinear panel model with a statistical package

2.4.4 Predicting future impacts

3 Lessons learned

3.1 Importance of temperature extremes

3.2 Modeling non-linearity.

3.3 Spatial correlation of error terms

3.4 Levels versus growth effects

3.5 Modeling adaptation

3.5.1 When panel models account for long-run adaptation

3.5.2 Cross-sectional heterogeneity in the marginal effect of weather

3.5.3 Evaluating adaptation related policies

3.6 Informing empirical models with insights from other fields

3.6.1 Biophysical crop models

3.6.2 Human physiology

3.6.3 Natural laws

3.7 Omitted variables

3.8 Interlinkages across space and time

3.9 Uncertainty and expected impacts

3.10 Remote sensing: the data frontier

4 Conclusion

Chapter 3: Discounting

2 Part I: Discounting under certainty

2.1 Why do we discount the future?

2.2 A model-free argument for discounting

2.3 Discounted expected utility and the Ramsey rule

2.4 Aggregation of heterogenous time preferences

2.5 Other extensions

3 Part II: Discounting under uncertainty

3.1 Stochastic discount factor

3.2 Risk-adjusted discount rates: Prudence and risk-aversion

3.3 Consumption-based capital asset pricing model (CCAPM)

3.4 Classical CCAPM

3.5 Asset pricing puzzles and their implications in the discounting debate

3.6 Infrequent macro catastrophes

3.7 Parametric uncertainty

3.8 Other social welfare functions

4 Policy issues

4.1 Public policy evaluation in practice

4.2 Application to climate change

5 Conclusion

Chapter 4: Adaptation to climate change

2 Defining adaptation: two channels of adaptive decision-making

2.1 Channel 1: Ex post response to a climate shock

2.2 Channel 2: Ex ante investment based on beliefs

2.3 Exogenous conditions governing the adaptation decision environment

3 Why study adaptation? The evolution of the adaptation literature and its policy motivations.

3.1 The study of adaptation to inform mitigation policy

3.1.1 Reduced form econometric approaches to account for adaptation in climate damage estimation

3.1.1.1 Methodologies

3.1.1.2 Key findings

3.1.2 Adaptation in quantitative general equilibrium models

3.1.2.1 Adaptation over time

3.1.2.2 Adaptation over space

3.1.3 Adaptation within integrated assessment models and process-based models

3.1.3.1 Adaptation in integrated assessment models

3.1.3.2 Exogenous adaptation in process-based models

3.2 The study of adaptation to inform adaptation policy

3.2.1 Methodology

3.2.1.1 Direct empirical estimation of ex post and ex ante adaptation

3.2.1.2 Empirical challenge #1: Sources of variation in weather

3.2.1.3 Empirical challenge # 2: External validity

3.2.2 Literature evaluating adaptation interventions

3.2.2.1 Changes to adaptation technology access or its price p, r

3.2.2.2 Changes to income y or access to social insurance programs that reduce income variability

3.2.2.3 Changes to the broader adaptation decision environment

3.2.3 Summary of studies quantifying impacts of specific adaptation interventions and/or constraints

4 The role of public policy in shaping adaptation outcomes

4.1 Two approaches to adaptation policy evaluation

4.2 Justifications for policy intervention in adaptation

4.2.1 Policy intervention can be justified when market imperfections distort private adaptation decisions

4.2.1.1 Information and beliefs

4.2.1.2 Public goods and natural monopolies

4.2.1.3 Adaptation externalities

4.2.1.4 Incomplete markets

4.2.2 Policy intervention can be justified on equity grounds

4.2.2.1 Equity weights

4.2.2.2 Moral responsibility

4.3 Potential inefficiencies from public provision of climate adaptation

5 Priorities for future research on adaptation.

5.1 Methodological recommendations

5.1.1 Improving econometric identification of ex ante adaptation at scale

5.1.2 Theoretical and/or empirical justification for the functional form of climate and weather

5.1.3 Robustness tests when short-run weather variation is limited

5.1.4 Studying adaptation to moderate weather conditions in addition to extremes

5.1.5 Improving relevance to future climate change

5.1.6 Leveraging long-run forecast information

5.1.7 Integration of empirical evidence into integrated modeling

5.2 Improving the literature's ability to inform adaptation policy

5.2.1 How to evaluate and adapt adaptation policy?

5.2.2 What is the scope for adaptation benefits in a given sector and/or region?

5.2.3 How constrained is ex ante adaptation?

5.2.4 Through which mechanisms do adaptation interventions operate?

5.2.5 Should the government intervene, and how?

5.2.6 Do the inefficiencies of public adaptation outweigh its benefits?

Appendix A

Chapter 5: On international cooperation

1 Introduction and overview

2 Climate policies as dynamic games

2.1 Greenhouse gases and technology stocks

2.2 Equilibrium concept: SPE vs. MPE?

3 What if there is no cooperation?

3.1 Example 1: Private windmills are public goods

3.2 Business as usual

4 Agreements as incomplete contracts

4.1 Example 2: The strategic choice of technology

4.2 Short-term agreements

4.3 Example 3: Strategic emission caps

4.4 Long-term agreements

4.5 Climate contracts over many periods

5 On the duration of agreements

5.1 Example 4: The cost of commitments

5.2 The optimal commitment period length

5.3 Updating and renegotiation design

6 Participation and coalition formation

6.1 Example 5: The result "m = 3"

6.2 Participation - with fixed duration.

6.3 Example 6: Endogenous duration

6.4 Participation - with endogenous duration

6.5 Further reading and farsightedness

7 Compliance with self-enforcing treaties

7.1 Example 7: A repeated game with trigger strategies

7.2 Compliance technology and self-enforcing agreements

7.3 Technologies, thresholds, and transfers

8 Narrow-but-deep vs. broad-but-shallow

8.1 Example 8: Two types of countries

8.2 Pledge-and-review bargaining

8.3 Modesty may pay

8.4 Institutional design

9 From Kyoto to Paris and beyond

Chapter 6: Climate policy options

2 Climate policy objectives

2.1 Efficient shadow pricing

2.2 The social cost of carbon

2.3 The global vs domestic SCC

2.4 The target consistent approach

3 Command and control

3.1 Abatement costs

3.2 Direct regulation

4 Emissions taxes and subsides

4.1 Carbon taxes

4.2 Subsidies and carbon offsets

4.2.1 Baselines and additionality

4.2.2 Accounting for transfers

4.3 Fossil fuel subsidies

5 Cap-and-trade programs

5.1 The basic mechanism

5.2 Empirical research

5.3 The allowance of offsets

6 Prices vs quantities

6.1 Weitzman's central result

6.2 Extensions and hybrid approaches

6.3 A generalization

7 Climate policy in an open economy

7.1 Basic setup

7.2 A unilateral tax with leakage

7.3 Combining multiple tax instruments

7.4 Carbon border adjustments

7.5 Green subsidies

8 Renewable energy subsidies

8.1 Investment vs production subsidies

8.2 Feed-in tariffs

9 Performance based standards

9.1 Basic theory

9.2 Electricity sector emission rates

9.3 Renewable portfolio standards

9.4 Low carbon fuel standards

9.5 Vehicle fuel economy standards

9.6 Feebates

10 Policy interactions

10.1 Overlapping policies

10.2 General equilibrium approaches.

10.3 Distributional effects and equity objectives.

Notes:

Includes bibliographical references.

Description based on publisher supplied metadata and other sources.

Description based on print version record.

ISBN:

0-443-31325-3

OCLC:

1478702620