Risks associated while dealing with environmental economics Cost-benefit analysis Risk Aversions

2. Stabilization of the
atmospheric
concentration of CO2
emissions worldwide
would need to be
dramatically reduced

3. Granger
Morgan
et al. (2009)
an appropriate response to deep uncertainty is to
adopt an iterative and adaptive decision-making
strategy

4. large uncertainties over the potential
impacts of climate change
the costs and benefits of actions taken
in response
in reducing GHG emissions

5. Two related ways of thinking
iterative risk management
sequential decision making
over time, decisions related to climate
change can be revised in the light of
improved information
long-term nature of the problem

6. Another way of viewing the problem is to look at the
potential irreversibility of future climate change
impacts (e.g., damages to ecosystems) against the
irreversibility of making investments in efforts to
reduce emissions
BENEFIT OF IMPROVED INFORMATION

7. high uncertainty
resilient strategies
identify a range of possible future
circumstances, and then choose
approaches that work reasonably well
across all the range adaptive strategies
that can be improved as more is
learned as the future progresses
contrasted these two approaches with
the cost–benefit approach, which seeks
to find an optimal strategy

8. a reasonable response to uncertainty is to have
a wide portfolio of possible responses
Adaptation
insurance against the chance
that unfavorable impacts
occur
climate research
Technology research
help to lower future costs.

9. "optimal"
Decision analysis
cost–benefit analysis cost-effectiveness analysis
maximizes net benefits minimizes net costs
how much emissions should be
allowed to grow over time
how to stabilize atmospheric
greenhouse gas concentrations at
lowest cost
exogenous

10. how willing or unwilling someone is to take risks
Risk-averse individuals
decision criteria that reduce the
chance of the worst possible
outcome
risk-seeking individuals
decision criteria that maximize the
chance of the best possible
outcome

11. there is considerable uncertainty
over decisions regarding climate
change
different attitudes over how to
proceed
IN SHORT…

12. "Disaggregated“ analysis of climate change
impacts
choice to assess impacts in a variety of indicators
or units, e.g., changes in agricultural yields and loss
of biodiversity
CBA converts all impacts into a common unit
(money)