IDEAS home Printed from https://ideas.repec.org/a/spr/masfgc/v24y2019i6d10.1007_s11027-018-9825-9.html
   My bibliography  Save this article

The crux with reducing emissions in the long-term: The underestimated “now” versus the overestimated “then”

Author

Listed:
  • Matthias Jonas

    (International Institute for Applied Systems Analysis)

  • Piotr Żebrowski

    (International Institute for Applied Systems Analysis)

Abstract

The focus of this perspective piece is on memory, persistence, and explainable outreach of forced systems, with greenhouse gas (GHG) emissions into the atmosphere serving as our case in point. In the light of the continued increase in emissions globally vis-à-vis the reductions required without further delay until 2050 and beyond, we conjecture that, being ignorant of memory and persistence, we may underestimate the “inertia” with which global GHG emissions will continue on their increasing path beyond today, thus, also leading to the amount of reduction that can be achieved in the future being overestimated. This issue is at the heart of mitigation and adaptation. For a practitioner, this translates to the problem of how persistently an emissions system behaves when subjected to a specified mitigation measure and which emissions level to adapt to for precautionary reasons in the presence of uncertainty. Memory allows us to reference how strongly the past can influence the “near-term future” of the system or (what we define as) its explainable outreach. We consider memory to be an intrinsic property of a system, retrospective in nature; and persistence to be a consequential (i.e., observable) feature of memory, prospective in nature and reflecting the tendency of a system to preserve a current state (including trend). Persistence depends on the system’s memory which, in turn, reflects how many historical states directly influence the current one. The nature of this influence can range from purely deterministic to purely stochastic. Different approaches exist to capture memory. We capture memory generically with the help of three characteristics: its temporal extent and both its weight and quality over time. The extent of memory quantifies how many historical data directly influence the current data point. The weight of memory describes the strength of this influence (fading of memory), while the quality of memory steers how well we know the latter (blurring of memory). Capturing fading and blurring of memory in combination is novel. In a numerical experiment with the focus on systemic insight, we cast a glance far ahead by illustrating one way to capture memory, and to understand how persistence plays out and how an explainable outreach of the system can be derived even under unfavorable conditions. We look into the following two questions: (1) Do we learn properly from the past? That is, do we have the right science in place to understand and treat memory appropriately? And (2) being aware that memory links a system’s past with its near-term future, do we quantify this outreach in a way that is useful for prognostic modelers and decision-makers? The latter question implies another question, namely, whether we can differentiate between and specify the various characteristics of memory (i.e., those mentioned above) by way of diagnostic data-processing alone? Or, in other words, how much system understanding do we need to have and to inject into the data-analysis process to enable such differentiation? Although the prime intention of our perspective piece is to study memory, persistence, and explainable outreach of forced systems and, thus, to expand on the usefulness of GHG emission inventories, our insights indicate the high chance of our conjecture proving true: being ignorant of memory and persistence, we underestimate, probably considerably, the “inertia” with which global GHG emissions will continue on their historical path beyond today and thus overestimate the amount of reductions that we might achieve in the future.

Suggested Citation

  • Matthias Jonas & Piotr Żebrowski, 2019. "The crux with reducing emissions in the long-term: The underestimated “now” versus the overestimated “then”," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 24(6), pages 1169-1190, August.
  • Handle: RePEc:spr:masfgc:v:24:y:2019:i:6:d:10.1007_s11027-018-9825-9
    DOI: 10.1007/s11027-018-9825-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11027-018-9825-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s11027-018-9825-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gregg Marland & Khrystyna Hamal & Matthias Jonas, 2009. "How Uncertain Are Estimates of CO2 Emissions?," Journal of Industrial Ecology, Yale University, vol. 13(1), pages 4-7, February.
    2. Lo, Andrew W, 1991. "Long-Term Memory in Stock Market Prices," Econometrica, Econometric Society, vol. 59(5), pages 1279-1313, September.
    3. Victor Chow, K. & Denning, Karen C. & Ferris, Stephen & Noronha, Gregory, 1995. "Long-term and short-term price memory in the stock market," Economics Letters, Elsevier, vol. 49(3), pages 287-293, September.
    4. José M. Belbute & Alfredo M. Pereira, 2017. "Do global CO emissions from fossil-fuel consumption exhibit long memory? a fractional-integration analysis," Applied Economics, Taylor & Francis Journals, vol. 49(40), pages 4055-4070, August.
    5. Silvo Dajcman, 2012. "Time-varying long-range dependence in stock market returns and financial market disruptions -- a case of eight European countries," Applied Economics Letters, Taylor & Francis Journals, vol. 19(10), pages 953-957, July.
    6. Hansen, Peter R. & Lunde, Asger, 2014. "Estimating The Persistence And The Autocorrelation Function Of A Time Series That Is Measured With Error," Econometric Theory, Cambridge University Press, vol. 30(1), pages 60-93, February.
    7. Barkoulas, John T. & Baum, Christopher F., 1996. "Long-term dependence in stock returns," Economics Letters, Elsevier, vol. 53(3), pages 253-259, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gabriel Bachner & Jakob Mayer & Laura Fischer & Elisabeth Frei & Karl W. Steininger & Mark Sommer & Angela Köppl & Stefan Schleicher, 2021. "Application of the Concept of "Functionalities" in Macroeconomic Modelling Frameworks – Insights for Austria and Methodological Lessons Learned. EconTrans Working Paper #4," WIFO Working Papers 636, WIFO.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anju Bala & Kapil Gupta, 2020. "Examining The Long Memory In Stock Returns And Liquidity In India," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 9(3), pages 25-43.
    2. Limam Imed, 2003. "Is Long Memory a Property of Thin Stock Markets? International Evidence Using Arab Countries," Review of Middle East Economics and Finance, De Gruyter, vol. 1(3), pages 56-71, December.
    3. Hull, Matthew & McGroarty, Frank, 2014. "Do emerging markets become more efficient as they develop? Long memory persistence in equity indices," Emerging Markets Review, Elsevier, vol. 18(C), pages 45-61.
    4. Erhard Reschenhofer & Manveer K. Mangat, 2021. "Fast computation and practical use of amplitudes at non-Fourier frequencies," Computational Statistics, Springer, vol. 36(3), pages 1755-1773, September.
    5. Barkoulas, John T. & Baum, Christopher F., 1996. "Long-term dependence in stock returns," Economics Letters, Elsevier, vol. 53(3), pages 253-259, December.
    6. Gil-Alana, L.A., 2006. "Fractional integration in daily stock market indexes," Review of Financial Economics, Elsevier, vol. 15(1), pages 28-48.
    7. Mulligan, Robert F., 2004. "Fractal analysis of highly volatile markets: an application to technology equities," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(1), pages 155-179, February.
    8. Gerlich, Nikolas & Rostek, Stefan, 2015. "Estimating serial correlation and self-similarity in financial time series—A diversification approach with applications to high frequency data," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 434(C), pages 84-98.
    9. David G. McMillan & Pako Thupayagale, 2009. "The efficiency of African equity markets," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 26(4), pages 275-292, October.
    10. Doyle, John R. & Chen, Catherine Huirong, 2012. "A multidimensional classification of market anomalies: Evidence from 76 price indices," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(5), pages 1237-1257.
    11. Guglielmo Maria Caporale & Luis Gil-Alana, 2011. "The weekly structure of US stock prices," Applied Financial Economics, Taylor & Francis Journals, vol. 21(23), pages 1757-1764.
    12. Goddard, John & Onali, Enrico, 2012. "Self-affinity in financial asset returns," International Review of Financial Analysis, Elsevier, vol. 24(C), pages 1-11.
    13. Assaf, Ata, 2016. "MENA stock market volatility persistence: Evidence before and after the financial crisis of 2008," Research in International Business and Finance, Elsevier, vol. 36(C), pages 222-240.
    14. Gianluca Mattarocci, 2009. "Market Characteristics and Chaos Dynamics in Stock Markets: an International Comparison," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Alessandro Carretta & Franco Fiordelisi & Gianluca Mattarocci (ed.), New Drivers of Performance in a Changing Financial World, chapter 6, pages 89-106, Palgrave Macmillan.
    15. Belbute, José M. & Pereira, Alfredo M., 2022. "ARFIMA Reference Forecasts for Worldwide CO2 Emissions and the National Dimension of the Policy Efforts to Meet IPCC Targets," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(1), pages 1-27, March.
    16. Saadet Kasman & Evrim Turgutlu & A. Duygu Ayhan, 2009. "Long memory in stock returns: evidence from the major emerging Central European stock markets," Applied Economics Letters, Taylor & Francis Journals, vol. 16(17), pages 1763-1768.
    17. Keith Jefferis & Pako Thupayagale, 2008. "Long Memory In Southern African Stock Markets," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 384-398, September.
    18. Ding, Liang & Luo, Yi & Lin, Yan & Huang, Yirong, 2021. "Revisiting the relations between Hurst exponent and fractional differencing parameter for long memory," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 566(C).
    19. Erhard Reschenhofer & Manveer K. Mangat, 2020. "Reducing the Bias of the Smoothed Log Periodogram Regression for Financial High-Frequency Data," Econometrics, MDPI, vol. 8(4), pages 1-15, October.
    20. Bariviera, Aurelio F. & Basgall, María José & Hasperué, Waldo & Naiouf, Marcelo, 2017. "Some stylized facts of the Bitcoin market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 484(C), pages 82-90.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:masfgc:v:24:y:2019:i:6:d:10.1007_s11027-018-9825-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.