Is there space for agreement on climate change? A non-parametric approach to policy evaluation
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Working Paper 136
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.
Simon Dietz and Anca N. Matei