A Primer on Discounting Climate Risks
نویسنده
چکیده
The choice of an overall discount rate for climate change investments depends critically on how di¤erent components of investment payo¤s are discounted at di¤ering rates reecting their underlying risk characteristics. Such underlying rates can vary enormously, from 1% for idiosyncratic diversi able risk to 7% for systemic nondiversi able risk. Which risk-adjusted rate is chosen can have a huge impact on costbene t analysis. In this paper I attempt to set forth in accessible language with a simple model what I think are the basic issues involved in discounting climate risks. The prototype application is calculating the social cost of carbon.
منابع مشابه
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The choice of an overall discount rate for climate change investments depends critically on how di¤erent components of investment payo¤s are discounted at di¤ering rates reecting their underlying risk characteristics. Such underlying rates can vary enormously, from 1% for idiosyncratic diversi able risk to 7% for systematic nondiversi able risk. Which risk-adjusted rate is chosen can have a hu...
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تاریخ انتشار 2013