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  Relative prices and climate policy: How the scarcity of nonmarket goods drives policy evaluation

Drupp, M. A., Hänsel, M. C. (2021): Relative prices and climate policy: How the scarcity of nonmarket goods drives policy evaluation. - American Economic Journal: Economic Policy, 13, 1, 168-201.
https://doi.org/10.1257/pol.20180760

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 Creators:
Drupp, Moritz A.1, Author
Hänsel, Martin C.2, Author              
Affiliations:
1External Organizations, ou_persistent22              
2Potsdam Institute for Climate Impact Research, ou_persistent13              

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 Abstract: Climate change not only impacts production and market consumption but also the relative scarcity of nonmarket goods, such as environmen-tal amenities. We study fundamental drivers of the resulting relative price changes, their potential magnitude, and their implications for climate policy in Nordhaus’s Dynamic Integrated Climate-Economy (DICE) model, thereby addressing one of its key criticisms. We pro-pose plausible ranges for these relative prices changes based on best available evidence. Our central calibration reveals that accounting for relative prices is equivalent to decreasing pure time preference by 0.6 percentage points and leads to a more than 50 percent higher social cost of carbon.

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 Dates: 2021-02-20
 Publication Status: Finally published
 Pages: -
 Publishing info: -
 Table of Contents: -
 Rev. Type: Peer
 Identifiers: DOI: 10.1257/pol.20180760
MDB-ID: No data to archive
PIKDOMAIN: RD3 - Transformation Pathways
Organisational keyword: RD3 - Transformation Pathways
Organisational keyword: FutureLab - Public Economics and Climate Finance
Research topic keyword: Biodiversity
Research topic keyword: Carbon Pricing
Research topic keyword: Climate Policy
Research topic keyword: Economics
Research topic keyword: Planetary Boundaries
Regional keyword: Global
 Degree: -

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Title: American Economic Journal: Economic Policy
Source Genre: Journal, SCI, Scopus
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Publ. Info: -
Pages: - Volume / Issue: 13 (1) Sequence Number: - Start / End Page: 168 - 201 Identifier: CoNE: https://publications.pik-potsdam.de/cone/journals/resource/american-economic-journal-economic-policy
Publisher: American Economic Association