Economics

Job Market Paper

The Cost of Uncertainty in Irreversible Climate Tipping Points (2023 - ongoing)
Climate tipping points are abrupt, irreversible shifts in the climate system, potentially locking the world into a high-temperature regime that is difficult or impossible to reverse. This paper examines the economic consequences of such tipping points, focusing on the costs associated with their unpredictability. Using an integrated assessment model with a climate system exhibiting a tipping point, I compute optimal abatement policies, assuming the tipping point is imminent or remote. To place a bound on the economic cost of the uncertainty in the tipping point, I compare two scenarios: one where a wishful thinker planner erroneously assumes the tipping point is remote and delays abatement, and another where a cautious planner assumes incorrectly that the tipping point is imminent. I find that the uncertainty around irreversible tipping points can cost up to 2.36% of world output. Moreover, I show that proceeding with caution, paying the certain, increasingly affordable costs of abatement today, is cheaper than gambling on the risk of crossing a tipping point.

Submitted papers

Work in progress

Neuroscience