A balance of questions: what can we ask of climate change economics?

David Comerford

Research output: Working paperDiscussion paper

Abstract / Description of output

The standard approach to the economics of climate change, which has its best known implementation in Nordhaus’s DICE and RICE models (well described in Nordhaus’s 2008 book, A Question of Balance [11]) is not well equipped to deal with the possibility of catastrophe, since we are unable to evaluate a risk averse representative agent’s expected utility when there is any significant probability of zero consumption. Whilst other authors attempt to develop new tools with which to address these problems, the simple solution proposed in this paper is to ask a question that the currently available tools of climate change economics are capable of answering. Rather than having agents optimally choosing a path (that differs from the recommendations of climate scientists) within models which cannot capture the essential features of the problem, I argue that economic models should be used to determine the savings and investment paths which implement climate targets that have been suggested in the physical science literature.
Original languageEnglish
PublisherEdinburgh School of Economics Discussion Paper Series
Number of pages23
Publication statusPublished - 6 Jan 2013
Externally publishedYes

Publication series

NameESE Discussion Papers

Keywords / Materials (for Non-textual outputs)

  • climate change
  • catastrophe
  • optimal policy
  • alternative energy investment
  • Q54
  • Q43
  • E22
  • H23


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