What Does it Take to Control Global Temperatures? A toolbox for testing and estimating the impact of economic policies on climate
Guillaume Chevillon (ESSEC Business School, France), Takamitsu, Kurita (Kyoto Sangyo University, Japan)

TL;DR
This paper develops a statistical toolbox using a stochastic integrated model to assess the feasibility and costs of climate stabilization policies through historical data analysis from 1000-2008.
Contribution
It introduces a novel integrated-cointegrated VAR model for testing the long-term impact of economic policies on global temperatures.
Findings
Carbon abatement can significantly stabilize global temperatures.
Retrospective policy to keep temperatures at 1900 levels costs about 75% of 2008 GDP.
Investing in carbon-neutral technology can be sustainable if costs are below 50% of 2008 GDP.
Abstract
This paper tests the feasibility and estimates the cost of climate control through economic policies. It provides a toolbox for a statistical historical assessment of a Stochastic Integrated Model of Climate and the Economy, and its use in (possibly counterfactual) policy analysis. Recognizing that stabilization requires supressing a trend, we use an integrated-cointegrated Vector Autoregressive Model estimated using a newly compiled dataset ranging between years A.D. 1000-2008, extending previous results on Control Theory in nonstationary systems. We test statistically whether, and quantify to what extent, carbon abatement policies can effectively stabilize or reduce global temperatures. Our formal test of policy feasibility shows that carbon abatement can have a significant long run impact and policies can render temperatures stationary around a chosen long run mean. In a…
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Taxonomy
TopicsClimate Change Policy and Economics · Global Energy and Sustainability Research · Energy, Environment, and Transportation Policies
