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Environmental and Resource Economics

, Volume 9, Issue 1, pp 103–124 | Cite as

Uncertain climate change in an intergenerational planning model

  • Asbjørn Torvanger
Original Papers

Abstract

A three-generation planning model incorporating uncertain climate change is developed. Each generation features a production activity based on capital and an exhaustible resource. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The model is solved by stochastic dynamic programming. If the climate impact and climate change probability is constant, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability. If, however, climate impact and climate change probability increases with increased aggregate resource use, this result is reversed.

Key words

climate change uncertainty irreversibility intergenerational stochastic dynamic programming resource extraction 

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Copyright information

© Kluwer Academic Publishers 1997

Authors and Affiliations

  • Asbjørn Torvanger
    • 1
  1. 1.Center for International Climate and Environmental ResearchOslo (CICERO)OsloNorway

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