Heterogeneous Beliefs and Climate Catastrophes
We study how heterogeneous beliefs about the causes and extent of global warming affect local mitigation and adaptation strategies and therefore global climate dynamics. Local policies are determined by expectations of policy makers about future climate. There are three types of expectations: strong skeptic, weak skeptic and ‘science-based’. Strong skeptics deny human-induced climate change and a possibility of a climate catastrophe. Weak skeptics believe that industrial emissions cause global warming, but deny catastrophic climate change. Science-based policy makers, considering the warning of the scientific community, account for both: human influence on climate and possible catastrophic shifts. Aggregate behavior of policy makers determines the total emission level which influences global climate dynamics. The paper argues that even if there are only skeptical policy makers the climate catastrophe can still be avoided.
KeywordsAdaptation Catastrophes Climate change Heterogeneous beliefs Skepticism
JEL ClassificationC61 Q54
The author is grateful to Aart de Zeeuw, Anastasios Xepapadeas, Florian Wagener, Antony Millner, the participants of the workshop ‘The Economics of Complex Systems’ at Beijer Institute (Stockholm) and the 13th Viennese Workshop on Optimal Control and Dynamic Games for comments on an earlier draft of this article, and to the two anonymous referees for their valuable comments and suggestions.
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