Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73014
Authors: 
Espagne, Etienne
Perrissin Fabert, Baptiste
Pottier, Antonin
Nadaud, Franck
Dumas, Patrice
Year of Publication: 
2012
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 61.2012
Abstract: 
The Stern/Nordhaus controversy has polarized the widely disparate beliefs about what to do in order to tackle the climate challenge. To explain differences in results and policy recommendations, comments following the publication of the Stern Review have mainly focused on the role played by the discount rate. A closer look at the actual drivers of the controversy reveals however that Stern and Nordhaus also disagree on two other parameters: technical progress on abatement costs and the climate sensitivity. This paper aims at appraising the relative impacts of such key drivers of the controversy on the social cost of carbon and climate policy recommendations. To this end, we use the flexible integrated assessment model RESPONSE which allows us to compare very diverse worldviews, including Stern and Nordhaus' ones within the same modelling framework and map the relative impacts of beliefs on the three key drivers of the controversy. Furthermore we appraise quantitatively, by means of a linear statistical model, the impacts on results of an extended set of core parameters of RESPONSE. We show that beliefs on long term economic growth, technical progress, the form of the climate damage function and the climate sensitivity have an impact as important as beliefs on pure time preference. Hence, we can qualify the role played by the discount rate in the Stern/Nordhaus controversy and more broadly in the definition of climate policies.
Subjects: 
Integrated Assessment Model
Discount Rate
Social Cost of Carbon
Abatement Policy
Worldview
JEL: 
Q54
Q58
C61
Document Type: 
Working Paper

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