Abstract
In this paper an intergenerational planning model incorporating uncertain climate change is developed. There are three generations and periods, each featuring a production activity based on capital and an exhaustible resource. There is climate stability in the first period. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The climate change impact and climate change probability may be constant or depend on aggregate resource use. In the beginning of each period a social planner allocates the available capital and resource stock to maximize the expected sum of discounted utilities given the observed climate state. The model is solved by employing stochastic dynamic programming. Some numerical illustrations from the model are given, and the optimal paths` sensitivity to different specifications of the climate change impact and climate change probability functions are tested. If the climate impact and climate change probability is constant and independent of the resource extraction path, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability, since the expected future resource productivity is lower than the present productivity. If, on the other hand, climate impact and climate change probability
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Torvanger, A
[1]
- Stiftelsen for Samfunns- og Naeringslivsforskning, Oslo (Norway)
Citation Formats
Torvanger, A.
Uncertain climate change in an intergenerational planning model.
Norway: N. p.,
1992.
Web.
Torvanger, A.
Uncertain climate change in an intergenerational planning model.
Norway.
Torvanger, A.
1992.
"Uncertain climate change in an intergenerational planning model."
Norway.
@misc{etde_10120653,
title = {Uncertain climate change in an intergenerational planning model}
author = {Torvanger, A}
abstractNote = {In this paper an intergenerational planning model incorporating uncertain climate change is developed. There are three generations and periods, each featuring a production activity based on capital and an exhaustible resource. There is climate stability in the first period. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The climate change impact and climate change probability may be constant or depend on aggregate resource use. In the beginning of each period a social planner allocates the available capital and resource stock to maximize the expected sum of discounted utilities given the observed climate state. The model is solved by employing stochastic dynamic programming. Some numerical illustrations from the model are given, and the optimal paths` sensitivity to different specifications of the climate change impact and climate change probability functions are tested. If the climate impact and climate change probability is constant and independent of the resource extraction path, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability, since the expected future resource productivity is lower than the present productivity. If, on the other hand, climate impact and climate change probability increases with increased aggregate resource use, the optimal period one (and two) resource extraction is lower than for the reference case, due to the increased climate change probability and potential climate impact from increased period one (and two) resource extraction. 12 refs., 1 figs., 5 tabs.}
place = {Norway}
year = {1992}
month = {Jun}
}
title = {Uncertain climate change in an intergenerational planning model}
author = {Torvanger, A}
abstractNote = {In this paper an intergenerational planning model incorporating uncertain climate change is developed. There are three generations and periods, each featuring a production activity based on capital and an exhaustible resource. There is climate stability in the first period. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The climate change impact and climate change probability may be constant or depend on aggregate resource use. In the beginning of each period a social planner allocates the available capital and resource stock to maximize the expected sum of discounted utilities given the observed climate state. The model is solved by employing stochastic dynamic programming. Some numerical illustrations from the model are given, and the optimal paths` sensitivity to different specifications of the climate change impact and climate change probability functions are tested. If the climate impact and climate change probability is constant and independent of the resource extraction path, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability, since the expected future resource productivity is lower than the present productivity. If, on the other hand, climate impact and climate change probability increases with increased aggregate resource use, the optimal period one (and two) resource extraction is lower than for the reference case, due to the increased climate change probability and potential climate impact from increased period one (and two) resource extraction. 12 refs., 1 figs., 5 tabs.}
place = {Norway}
year = {1992}
month = {Jun}
}