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Cost-Benefit Analysis of Climate Change: Where It Goes Wrong

A succinct explanation of the major problems with cost-benefit analysis when applied to climate policy

Frank Ackerman / Published on 22 July 2010
Citation

(2010). Cost-Benefit Analysis of Climate Change: Where It Goes Wrong. Economic Thought and U.S. Climate Change Policy, ed. David M. Driesen (Cambridge, MA: The MIT Press).

Includes an evaluation of William Nordhaus’ DICE model, the best-known of the conventional cost-benefit analyses of climate change; a comparison with the economic analysis of the British Stern Review; and suggestions for how to construct a better approach to climate economics.

Ackerman explains the importance of discount rates, the need to consider the possibility of catastrophic scenarios, and the role of new, lower-carbon technologies in economic development, which could help offset climate mitigation costs.

Read more about the book on the MIT Press website.

SEI author

Frank Ackerman
Related centres
SEI US

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