Is there space for agreement on climate change? A non-parametric approach to policy evaluation

Produced as part of the Developing climate science and economics CCCEP research programme theme


Economic evaluation of climate policy is notoriously dependent on assumptions about time and risk preferences, since reducing greenhouse gas emissions today has a highly uncertain pay-off, far into the future. These assumptions have always been much debated.

Rather than occupy a position in this debate, we take a non-parametric approach here, based on the concept of Time-Stochastic Dominance. Using an integrated assessment model, we apply Time-Stochastic Dominance analysis to climate change, asking are there global emissions abatement targets that everyone who shares a broad class of time and risk preferences would agree to prefer?

Overall we find that even tough emissions targets would be chosen by almost everyone, barring those with arguably `extreme’ preferences.

Simon Dietz and Anca N. Matei