Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse

Clarke, Harry; Reed, William J.

doi:10.1016/0165-1889(94)90042-6

Cited by 198 publications

(157 citation statements)

References 11 publications

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“…For example, the shift can be triggered when some a-priori unknown threshold is crossed (as in Tsur and Zemel, 1996;Naevdal, 2006). Alternatively, it may be due to a random occurrence controlled by some given hazard rate (Clarke and Reed, 1994;Tsur and Zemel, 1998;Gjerde et al, 1999;Haurie and Moresino, 2006). The models differ also in the specification of the postoccurrence outcome.…”

Section: Introductionmentioning

confidence: 99%

“…This is indeed what we find here, but it is not the general conclusion in the literature. For example, several studies (Clarke and Reed, 1994;Tsur and Zemel, 1998;Aronsson et al, 1998;Gjerde et al, 1999;Polasky et al, 2011) consider "doomsday" regime shifts associated with a total loss of value. In this case the hazard rate is effectively added to the discount rate, increasing impatience and implying enhanced emissions (for a constant hazard rate) and ambiguous behavior (for increasing hazard rates).…”

Section: Introductionmentioning

confidence: 99%

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Regime shifts and uncertainty in pollution control

Zeeuw

Zemel

2012

Journal of Economic Dynamics and Control

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We develop a simple model of managing a system subject to pollution damage under risk of an abrupt and random jump in the damage coefficient. The model allows the full dynamic characterization of the optimal emission policies under uncertainty. The results, that imply prudent behavior due to uncertainty, are compared with the ambiguous outcomes reported in the literature for similar models. The differences are explained in terms of the properties of the damage function associated with each model. The framework is used to analyze the adaptation vs. mitigation dilemma and provides a simple criterion to determine whether adaptation activities should be undertaken promptly, delayed to some future date, or avoided altogether. Terms of use: Documents in EconStor mayJEL-Code: Q280, Q520, Q540.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Regime shifts and uncertainty in pollution control

Zeeuw

Zemel

2012

Journal of Economic Dynamics and Control

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“…Tsur and Zemel, henceforth referred to as T&Z, 1996a, and references therein). In this work, we focus on event uncertainty of the type introduced by Cropper (1976) and analyzed by Clarke and Reed (1994) (henceforth referred to as C&R). Such events are triggered by stochastic environmental (exogenous) conditions and their occurrence hazard depends only on the current pollution level.…”

Section: Introductionmentioning

confidence: 99%

Pollution control in an uncertain environment

Tsur

Zemel

1998

Journal of Economic Dynamics and Control

101

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Abstract:The effects of the threat of occurrence of environmental catastrophes on optimal pollution control are considered. Recent analysis of irreversible events is extended to two types of reversible events: single-occurrence and multipleoccurrence (recurrent) events. While it is possible that the threat of irreversible events induces more pollution, we show that reversible events, under quite general conditions, induce more conservation (less pollution). The analysis is carried out via a simple method (the "hδ -method") to identify optimal steady states by comparing steady state policies with small variations from them. For recurrent events the optimal state process must approach a unique steady state from any initial level. In this case, the hδ -method characterizes the dynamic behavior of the optimal state process without actually solving for it.

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“…In this way, policy can trade off a higher exploitation of resources in the system versus a higher risk of tipping the system (Polasky et al 2011). The literature using hazard-rate models in environmental economics already started in the earlier literature (e.g., Clarke and Reed 1994;Tsur and Zemel 1996;Gjerde et al 1999). However, in recent years it really took off, mainly because of the issue of climate change.…”

Section: Uncertaintymentioning

confidence: 99%