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Beyond the Stern Review: Lessons from a risky venture at the limits of the cost-benefit analysis

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  • Hourcade, Jean-Charles
  • Ambrosi, Philippe
  • Dumas, Patrice

Abstract

This paper argues that debates amongst economists triggered by the Stern Review are partly relevant, focusing on key parameters translating real ethical issues, and partly misplaced in that they do not consider enough other determinants of climate change damages: i) the specifications of the utility function used for the assessments (preference for the environment, preference for smooth growth paths), ii) the interplay between uncertainty and the sequentiality of the decision, and iii) whether the growth engines behind the integrated assessment models can account for transient disequilibrium and sub-optimality. We derive some suggestions for any future research agenda in integrated assessment modelling, whatever the position of the analysts about the relevance of the intertemporal optimisation framework and the Bayesian approach to uncertainty in the climate affair.

Suggested Citation

  • Hourcade, Jean-Charles & Ambrosi, Philippe & Dumas, Patrice, 2009. "Beyond the Stern Review: Lessons from a risky venture at the limits of the cost-benefit analysis," Ecological Economics, Elsevier, vol. 68(10), pages 2479-2484, August.
    • Handle: RePEc:eee:ecolec:v:68:y:2009:i:10:p:2479-2484
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    Cited by:

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    3. Jean Charles Hourcade & Michel Aglietta & Baptiste Perrissin-Fabert, 2014. "Transition to a Low-Carbon society and sustainable economic recovery, a monetary-based financial device," Post-Print hal-01692593, HAL.
    4. Franck Lecocq & Jean-Charles Hourcade, 2016. "Unspoken Ethical Issues in the Climate Affair: Insights from a Theoretical Analysis of Negotiation Mandates," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 311-340, Springer.
    5. Vallejo, María Cristina & Burbano, Rafael & Falconí, Fander & Larrea, Carlos, 2015. "Leaving oil underground in Ecuador: The Yasuní-ITT initiative from a multi-criteria perspective," Ecological Economics, Elsevier, vol. 109(C), pages 175-185.
    6. Vale, Petterson Molina, 2016. "The changing climate of climate change economics," Ecological Economics, Elsevier, vol. 121(C), pages 12-19.
    7. Moxnes, Erling, 2014. "Discounting, climate and sustainability," Ecological Economics, Elsevier, vol. 102(C), pages 158-166.

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