On January 22nd, 2015
at Maison des Sciences  Economiques (Room S/17)

The two speakers are

Simon Dietz (Grantham Research Institute – LSE)

and

Alain Ayong Le Kama (UPOND)

Simon Dietz  (Grantham Research Institute – LSE)

 

joint with Nicoleta Anca Matei

“Spaces for agreement: a theory of Time-Stochastic Dominance and an application to climate change“

Abstract:  

Many investments involve both a long time-horizon and risky returns. Making investment decisions thus requires assumptions about time and risk preferences. Such assumptions are frequently contested, particularly in the public sector, and there is no immediate prospect of universal agreement. Motivated by these observations, we develop a theory and method of finding ‘spaces for agreement’. These are combinations of classes of discount and utility function, for which one investment dominates another (or ‘almost’ does so), so that all decision-makers whose preferences can be represented by such combinations would agree on the option to be chosen. The theory is built on combining the insights of stochastic dominance on the one hand, and time dominance on the other, thus offering a nonparametric approach to inter-temporal, risky choice. We go on to apply the theory to the controversy over climate policy evaluation and show with the help of a popular simulation model that, in fact, even tough carbon emissions targets would be chosen by almost everyone, barring those with arguably ‘extreme’ preferences.

Alain Ayong Le Kama (UPOND)

joint with Aude Pommeret

“Mitigation and adaptation are not enough: turning toemissions reduction abroad“

 

Abstract:  

In this paper we focus on a long-term dynamic analysis of the optimal adaptation/mitigation mix in the presence of a pollution threshold above which adaptation is no longer efficient. We account for accumulation in abatement capital, greenhouse gases, and adaptation capital in order to better capture the arbitrage between abatement and adaptation investments. Pollution damages arise from the emissions due to the country consumption but also from the emissions of the rest of the world (ROW). A pollution threshold is then introduced, above which adaptation is no longer efficient. We obtain that if this threshold is lower than the steady-state level of pollution, there is no way for the modeled economy to avoid it. In particular, such a situation will appear if the ROW’s emissions are high. Next step is then to introduce another type of investment allowing for lower ROW pollution i.e. emissions reduction abroad through CDM for instance. We obtain that CDM may be a means to avoid a pollution threshold above which adaptation becomes of no use.

Organisateur

  • Paris Environmental and Energy Economics Seminar

Lieu

Maison des Sciences Economiques 106 - 112 Boulevard de l'Hôpital, Paris, 75013 France