第二十一课Markets for Greenhouse Gases(政府产业规制-麻理工学院 Michael Pollitt).pdfVIP

14.23 Government Regulation of Industry Class 21: Markets for Greenhouse Gases MIT University of Cambridge 1 Outline • The GHG problem • Some Economics relevant to Climate Change • Marginal damage costs of Climate Change • The Nature of Uncertainty • Economic Policy and Uncertainty • Benefits of International Co-operation • McCain-Lieberman Draft Bill 2 Source: Reilly et al., 2003, /globalchange/www/PewCtr_MIT_Report03.pdf, p.5. 3 Potential damage of rising climate • Sea level rise leading to: dryland loss, wetland loss, coastal protection and migration. • Agricultural output and distribution of output effects. • Heat stress, cold stress, malaria, tropical cyclones, extra tropical storms, river floods and unmanaged ecosystems. • The effect of these would be deaths, migration and increased mitigation expenditures. • Standard estimate range is that average global temperature will rise by 1.5-4.5C by 2100. 4 Some difficulties in assessing climate change • We are actually talking about managing risk under uncertainty. There are two ways of dealing with this: insurance and mitigation. • Problems for analysis: – Difficulty in assessing risks. Why? – Risks are endogenous. Why? – Individual risks correlated with each other. So, what? – Irreversibility. How is this significant? 5 Is insurance the answer? • If I (or the UK) am worried about climate change, why can’t I (or the UK) just take out an insurance policy? • State of nature contingent markets do exist: – Chicago Catastrophe Fu