PhD Lunch Seminars Amsterdam

Mark Kagan (VU University)

Despite overwhelming scientific evidence for man-made climate change, many people and policymakers still remain skeptical about the subject. While this phenomenon of `climate-skepticism’ prevents implementation of environmental policies around the globe, it is ignored in economic models of climate change. In this paper we fill this gap by modeling policymakers with varying levels of skepticism facing a climate change catastrophe. We numerically define the level of climate skepticism by the probability assigned by the policy-maker to the possibility that climate change is not emission-driven. We then calculate optimal emission and consumption paths for
various levels of belief in man-made climate change to explore the true cost of climate skepticism. Our findings are as follows. First of all we find that when facing catastrophic climate change even a completely skeptic policy will not lead to unbounded climate change and emissions. Second, we
find there is still a significant loss due to climate-change resulting from skepticism if emission-driven climate change is real. Lastly, we find that moderate levels of skepticism will still lead to significant cuts in greenhouse gas emissions.