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Title: Comparing Alternative Policies Against Environmental Catastrophes

Author(s): Timothy J. Besley and Avinash K. Dixit

Publication Date: January 2017

Keyword(s): catastrophic risk and climate change

Programme Area(s): Development Economics

Abstract: We construct a model with three features important in the context of major environmental catastrophes: (1) the distribution of possible damage has a fat tail, (2) the probability of the catastrophic event increases as greenhouse gases accumulate, (3) a technological solution may emerge making conservation efforts unnecessary. We solve the model numerically for plausible values of the parameters, and evaluate the tradeoffs between alternative policies such as prevention, mitigation, and technological fixes.

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Bibliographic Reference

Besley, T and Dixit, A. 2017. 'Comparing Alternative Policies Against Environmental Catastrophes'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11802