Systematic sensitivity analysis of the full economic impacts of sea level rise

The potential impacts of sea level rise (SLR) due to climate change have been widely studied in the literature. However, the uncertainty and robustness of these estimates has seldom been explored. Here we assess the model input uncertainty regarding the wide effects of SLR on marine navigation from a global economic perspective. We systematically assess the robustness of computable general equilibrium (CGE) estimates to model’s inputs uncertainty. Monte Carlo (MC) and Gaussian quadrature (GQ) methods are used for conducting a Systematic sensitivity analysis (SSA). This design allows to both explore the sensitivity of the CGE model and to compare the MC and GQ methods. Results show that, regardless whether triangular or piecewise linear Probability distributions are used, the welfare losses are higher in the MC SSA than in the original deterministic simulation. This indicates that the CGE economic literature has potentially underestimated the total economic effects of SLR, thus stressing the necessity of SSA when simulating the general equilibrium effects of SLR. The uncertainty decomposition shows that land losses have a smaller effect compared to capital and seaport productivity losses. Capital losses seem to affect the developed regions GDP more than the productivity losses do. Moreover, we show the uncertainty decomposition of the MC results and discuss the convergence of the MC results for a decomposed version of the CGE model. This paper aims to provide standardised guidelines for stochastic simulation in the context of CGE modelling that could be useful for researchers in similar settings

Active learning and optimal climate policy

This paper develops a climate-economy model with uncertainty, irreversibility, and active learning. Whereas previous papers assume learning from one observation per period, or experiment with control variables to gain additional information, this paper considers active learning from investment in monitoring, specifically in improved observations of the global mean temperature. We find that the decision maker invests a significant amount of money in climate research, far more than the current level, in order to increase the rate of learning about climate change. This helps the decision maker make improved decisions. The level of uncertainty decreases more rapidly in the active learning model than in the passive learning model with only temperature observations. As the uncertainty about climate change is smaller, active learning reduces the optimal carbon tax. The greater the risk, the larger is the effect of learning. The method proposed here is applicable to any dynamic control problem where the quality of monitoring is a choice variable, for instance, the precision at which we observe GDP, unemployment, or the quality of education

Is Economic Growth Sustainable? A Trend Analysis for the Netherlands, 1990-1995

In this paper, we present a measure of Sustainable National Income (SNI) , which corrects Net National Income (NNI) for the costs to bring back environmental resource use to a ‘sustainable’ level. The SNI measure is calculated for the Netherlands, for the years 1990 and 1995. We use an applied general equilibrium (AGE) model specifying 27 production sectors. The model includes emissions and abatement cost curves, based on large data sets for 9 environmental themes. The model combines the advantages of a top-down approach (the AGE model) with the information of a bottom-up approach (the environmental data and data on emissions reductions costs). We are specifically interested in the change of SNI in connection to changes in the standard measure of Net National Income (NNI). Economic change over the period 1990-1995 is analysed regarding changes in overall scale, sectoral composition of production and consumption, and technologies used for production. We show that economic growth per se is unsustainable, in the sense that the growth of the SNI-measure does not catch up with the growth in NNI, if we only consider economic expansion over the period 1990-1995, while disregarding compositional and technological change. The Dutch economy has, however, moved towards sectors less dependent on resource use, and furthermore, technological change has allowed output growth, using the same amounts of resource inputs. The numerical calculations show that this has resulted in a proportional growth of the SNI measure compared to the NNI, that is, the SNI as a percentage of NNI has almost remained constant. We conclude from this that the sources of growth were sustainable over the period 1990-1995

Impacts of CO2-taxes in an economy with niche markets and learning-by-doing [Dataset]

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