I. Why do the author?s believe that climate change is an ?enormously
A. What horizons do they want to study policy for in terms of ?GHG?
control? What two approaches exist to this question?
B. What is meant by the cost effective approach? What issues do
people tend to study using this approach?
C. What is meant by the ?cost-benefit approach?? What highly contentious
issues does this approach introduce?
D. What issues in administration come up regardless of the choice of
II. What issues can we learn about in terms of cost-effective policies designed
to stabilize the climate?
A. What technologies do these modelers consider for producing energy/emissions?
How do these models handle potential technologies
that do not exist yet?
B. What ?participation? constraints may exist on these models? How
do economists analyze models that face no constraints? What do
such models produce as estimates of climate costs?
Teacher?s note: A Participation (or incentive constraint) is the
most rigourous economists deal with cases where Pareto Optimality
is not possible, for example because the only taxes allowed
are distortionary. The maximum of social welfare (in this case
the minimum of social costs) can be taken with this additional
limit implied on the possible policies. The difference between the
maximization with such a constraint and without a constraint captures
the deadweight loss that policy makers should be willing to
pay. Economists call this constrained pareto optimal or sometimes
C. What do the authors see as the biggest issues in handling these
types of questions?
D. What does Figure 1 represent in terms of this type of analysis?
Why are there multiple curves on it? How does Table 1 relate
to Figure 1? What observations from this figure do the authors
Teacher?s note: We skipped this question in class but please do
read, this a statement about uncertainty.
E. In general, the authors do report some estimates the cost of meeting
certain carbon targets as being in the same ballpark. What
are those targets and the facts against them?
1. How does the price of carbon the authors find as necessary to
meet a target relate to estimates of the cost of climate change?
F. The above relies on least cost pricing What big deviations from
this (in terms of pattern of CO2 reductions across economies) do
the authors think of likely? How should these affect the cost of
III. What are the uses and implications of marginal damage assessment?
A. What is the relationship between marginal damages and total
damages in theory and in measurement? Why estimate marginal
B. What empirical results do the authors find from the total damage
estimates in these papers? How are we going to use them to find
C. What is the big missing types of damages that are mostly not
included in the above? The authors mention two papers which do
include this. Quantitatively what do they find?
D. How do economists derive estimates of marginal damages from
estimates of total damages? Why is a discount factor used in
these calculations? What results do they find?
E. How do economists generally think about discount rates in cost
benefit analysis? How do they pick specific rates for this analysis?
F. What critique do the authors offer for models of catastrophic risk?
How can they be fixed? Why does it matter if climate risk models
have thin vs flat tails? What other ways could catastrophic risk
models be justified?
G. What categories of not catastrophic risk have been quantified?
How can you see this in Box 1? Which are speculative?
H. How does irreversibility and learning effect these measures?
IV. How do the models of cost/benefits of climate stabilization compare?
A. What do the author?s consider their lower bound on the appropriate
target for a price on climate? How do they justify higher
B. What conclusions do the authors draw from these numbers? How
do they think future research should evolve on these subjects?