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SEI working paper

Climate policy and development: an economic analysis

This article describes the use of the Climate and Regional Economics of Development (CRED) model to explore the interconnections between climate and development policy.

Frank Ackerman, Elizabeth A. Stanton, Ramón Bueno / Published on 21 September 2012

Ackerman, F., E.A. Stanton and R. Bueno (2012). Climate policy and development: an economic analysis. E3 Network working paper.

CRED scenarios, based on high and low projections of climate damages, and high and low discount rates, are used to analyze the effects of varying levels of assistance to the poorest regions of the world.

The authors find that climate and development choices are nearly independent of each other if the climate threat is seen as either very mild or very serious. The optimal climate policy is to do very little in the former case, and a lot in the latter case, regardless of development. In the latter case, however, assistance may be required for the poorest regions to respond to serious climate threats in the globally “optimal” manner.

Under intermediate assumptions about the severity of climate risks, development policy plays a greater role. In one scenario, which falls within the range of current debate, a high level of development assistance makes the difference between success and failure in long-term stabilization of the global climate.

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SEI authors

Topics and subtopics
Climate : Adaptation, Mitigation
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