FRSEMR 70E: Climate Change Economics: Analysis and Decisions




Climate change is one of the most difficult problems facing humanity. This seminar relies on modern economic theory to focus on how an economist frames and views the basic issues. A small sample of questions to be asked and answers attempted in this seminar includes the following. How do we analyze and decide what to “do” about climate change? What are the basic “models” combining economics with climate science, what are these models telling us, and how do we choose among their varying messages? How are risk and uncertainty incorporated? How do we estimate future costs of carbon-light technologies? How do we quantify damages, including ecosystem damages? Who pays for what? Why are discounting and the choice of discount rate so critical to the analysis and what discount rate should we use? What is the “social cost of carbon” and how is it used? Which instruments (prices, quantities, standards, etc.) are available to control greenhouse gas emissions and what are the strengths and weaknesses of each? What is “climate sensitivity” and why is it, and the feedbacks it incorporates, so important? How should the possibility of catastrophic climate change be evaluated and incorporated? What are costs and benefits of geoengineering the planet to counter global warming? Why has climate change been characterized as “the biggest international market failure of all time” and how might the world resolve the associated free-rider problem?