Valuing Climate Change Mitigation

Valuing Climate Change Mitigation

Applying Stated Preferences in the Presence of Uncertainty

Sonia Akter and Jeff Bennett

Valuing Climate Change Mitigation discusses the role of uncertainty in valuing the benefits of climate change mitigation policies using contingent valuation and choice experiment techniques. It treats climate change using three dimensions of uncertainty: scenario, policy and preference. Conceptual frameworks are advanced to account simultaneously for these various dimensions of uncertainty. The authors then explore the impact of introducing these uncertainties into benefit estimates for the Australian Carbon Pollution Reduction Scheme.

Chapter 1: Climate Change and Uncertainty

Sonia Akter and Jeff Bennett

Subjects: economics and finance, environmental economics, valuation, environment, climate change, environmental economics, valuation


1.1 INTRODUCTION Anthropogenic climate change is one of the greatest environmental policy challenges facing the modern world. It has emerged as the central international environmental question of the last quarter of the twentieth century. In the simplest language, climate change can be defined as predicted changes in the world’s weather patterns due to the accumulation of greenhouse gases (GHGs) in the atmosphere. Greenhouse gases refer to a set of gases, such as carbon dioxide (CO2), methane (CH4) and nitrogen dioxide (N2O), which trap heat released by the sun and, consequently, make the globe warmer. Some climate scientists claim that atmospheric concentrations of CO2 increased by 36 per cent between the pre-industrial era and 2005, resulting in an increase in average global temperature of 0.74 °C. If this trend continues, then average global temperature is forecast to rise by 3 °C by 2100 (IPCC, 2007). This increase in global warming is predicted to cause changes in climatic patterns that may include changes in rainfall patterns leading to water shortages and/or flooding; melting of glaciers; an increase in sea level; shifts in crop growing seasons affecting food security; and changes in the distribution of disease vectors, putting more people at risk of contracting insect-borne diseases such as malaria and dengue fever (IPCC, 2007). Some of the positive effects of climate change include longer crop and fish growing seasons, higher yield growth rates at higher latitudes and lower winter mortality in many temperate regions such as the UK, Scandinavia, Europe and North America...

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