Past Event

Visiting Speaker Seminar: Reyer Gerlagh, Tilburg University - "Consistent Climate Policies"

What are the optimal climate policies when time preferences deviate from the standard exponential discounting and decision makers cannot commit to future policies? We show that, with time-declining discounting, the delay and persistence of climate impacts provide a commitment device to policy makers. We quantify the commitment value in a climate-economy model by solving timeconsistent Markov equilibrium capital and emission taxes explicitly. The returns on capital and climate investments are no longer equal, leading to a large increase in the emission tax, compared to a benchmark with equalized returns. The commitment value increases the tax by a factor of 20 in our quantitative assessment.

Details:

20 October 2016 11:00 - 12:30


Location

INET Oxford

Eagle House, Walton Well Road, Oxford, OX2 6ED


Economics of Sustainability