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Abrupt positive feedback and the social cost of carbon

Abstract:

Optimal climate policy should act in a precautionary fashion to deal with tipping points that occur at some future random moment. The optimal carbon tax should include an additional component on top of the conventional present discounted value of marginal global warming damages. This component increases with the sensitivity of the hazard to temperature or the stock of atmospheric carbon. If the hazard of a catastrophe is constant, no correction is needed of the usual Pigouvian tax. The result...

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Publication status:
Published

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Publisher:
University of Oxford
Series:
OxCarre Papers
Publication date:
2013-09-17
Paper number:
122
Keywords:
Pubs id:
1143741
Local pid:
pubs:1143741
Deposit date:
2020-12-15

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