Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155045
Authors: 
Minh, Ha-Duong
Treich, Nicolas
Year of Publication: 
1999
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 92.1999
Abstract: 
This paper distinguishes relative risk aversion and resistance to intertemporal substitution in climate risk modelling. Stochastic recursive preferences are introduced in a stylised numeric climate-economy model using preliminary IPPC 1998 scenarios. It shows that higher risk aversion increases the optimal carbon tax. Higher resistance to intertemporal substitution alone has the same effect as increasing the discount rate, provided that the risk is not too large. We discuss implications of these findings for the debate upon discounting and sustainability under uncertainty.
Subjects: 
Recursive utility
risk
discounting
sustainability
climate
JEL: 
Q20
D81
D90
H43
Document Type: 
Working Paper

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