Sacrificing consumption to mitigate catastrophic risks

I have recently come across this new working paper by Timothy Besley and Avinash Dixit. They develop a theoretical model in order to understand how much consumption society should give up in order to mitigate catastrophic risk. I am not really happy about something there.

This is of course a highly topical and important research question. Both Timothy Besley and Avinash Dixit are extremely good and highly acclaimed researchers. But there is one thing that vexes me a bit. In their article and their VOX column they have nearly no reference to the substantial environmental economics literature that already exists on this topic. In fact, their whole list of references is from a small circle of US or UK researchers and they thus do not discuss their results within the lights of the significant literature that is already out there.

I understand that both Timothy Besley and Avinash Dixit are not really environmental economists and are thus potentially unaware of the extensive research that is being done on this topic. Given the number of researchers that are out there nowadays it is difficult to work on topics outside of one’s own discipline. I also know that it is very difficult to know about all the literature that is out there since it is already very large. But the implication is, of course, that very often one’s research is less original than one thinks and hopes. So I will take this opportunity to give a non-exhaustive list of references on this topic in the hope that the authors and other readers interested in this topic can put their results more into perspective:

Tsur, Yacov, and Amos Zemel. “Pollution control in an uncertain environment.” Journal of Economic Dynamics and Control 22.6 (1998): 967-975.

Tsur, Yacov, and Amos Zemel. “Welfare measurement under threats of environmental catastrophes.” Journal of Environmental Economics and Management 52.1 (2006): 421-429.

De Zeeuw, Aart, and Amos Zemel. “Regime shifts and uncertainty in pollution control.” Journal of Economic Dynamics and Control 36.7 (2012): 939-950.

Baranzini, Andrea, Marc Chesney, and Jacques Morisset. “The impact of possible climate catastrophes on global warming policy.” Energy Policy 31.8 (2003): 691-701.

Tsur, Yacov, and Amos Zemel. “Policy tradeoffs under risk of abrupt climate change.” Journal of Economic Behavior & Organization 132 (2016): 46-55.

Gjerde, Jon, Sverre Grepperud, and Snorre Kverndokk. “Optimal climate policy under the possibility of a catastrophe.” Resource and Energy Economics 21.3 (1999): 289-317.

Polasky, Stephen, Aart De Zeeuw, and Florian Wagener. “Optimal management with potential regime shifts.” Journal of Environmental Economics and management 62.2 (2011): 229-240.

Tsur, Yacov, and Amos Zemel. “Coping with Multiple Catastrophic Threats.” Environmental and Resource Economics (2017): 1-22.

Nævdal, Eric. “Dynamic optimisation in the presence of threshold effects when the location of the threshold is uncertain–with an application to a possible disintegration of the Western Antarctic Ice Sheet.” Journal of Economic Dynamics and Control 30.7 (2006): 1131-1158.

Schumacher, Ingmar. “When should we stop extracting nonrenewable resources?.” Macroeconomic Dynamics 15.4 (2011): 495-512.

Mavi, Can Askan. “Can a hazardous event be another source of poverty traps?.” (2017).

Zemel, Amos. “Adaptation, mitigation and risk: An analytic approach.” Journal of Economic Dynamics and Control 51 (2015): 133-147.

Ren, Bijie, and Stephen Polasky. “The optimal management of renewable resources under the risk of potential regime shift.” Journal of Economic Dynamics and Control 40 (2014): 195-212.

Crépin, Anne-Sophie, et al. “Regime shifts and management.” Ecological Economics 84 (2012): 15-22.

Bommier, Antoine, Bruno Lanz, and Stéphane Zuber. “Models-as-usual for unusual risks? On the value of catastrophic climate change.” Journal of Environmental Economics and Management 74 (2015): 1-22.
I am sure there is more out there and I am happy if readers can help complete this list.

 

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