Monte Carlo Methods in Environmental Economics

Abstract

The role of Monte Carlo methods in environmental economics and its subdisciplines, has increased in importance during the past several years. Due to the increasing power of computers and the development of sophisticated software, Monte Carlo and other computer-based simulation methods have emerged and established themselves as a third approach for advancing environmental and resource economics along side with traditional theory and empirical research. In this paper we review the contribution in environmental and resource economics of Monte Carlo method applications, illustrate guidelines for Monte Carlo results to be effectively and accurately communicated to and independently reproduced by other researchers, and survey the main methods and software options for executing Monte Carlo experiments.