Humanity is risking the health of the natural environment through a myriad of interventions, including the atmospheric emission of trace gases such as carbon dioxide, the use of ozone-depleting chemicals, the engineering of massive land-use changes, and the destruction of the habitats of many species. It is imperative that we learn to protect our common geophysical and biological resources. Although scientists have studied greenhouse warming for decades, it is only recently that society has begun to consider the economic, political, and institutional aspects of environmental intervention. To do so raises formidable challenges of data modeling, uncertainty, international coordination, and institutional design.Attempts to deal with complex scientific and economic issues have increasingly involved the use of models to help analysts and decision makers understand likely future outcomes as well as the implications of alternative policies. This book presents in detail a pair of models of the economics of climate change. The models, called RICE-99 (for the Regional Dynamic Integrated model of Climate and the Economy) and DICE-99 (for the Dynamic Integrated Model of Climate and the Economy) build on the authors' earlier work, particularly their RICE and DICE models of the early 1990s. They can help policy makers design better economic and environmental policies.

Warming the World: Economic Models of Global Warming

As scientific and observational evidence on global warming piles up every day, questions of economic policy in this central environmental topic have taken centre stage. But as author and prominent Yale economist William Nordhaus observes, the issues involved in understanding global warming and slowing its harmful effects are complex and cross disciplinary boundaries. Ecologists see global warming as a threat to ecosystems, utilities as a debit to their balance sheets, and farmers as a hazard to their livelihoods. In this important work, William Nordhaus integrates the entire spectrum of economic and scientific research to weigh the costs of reducing emissions against the benefits of reducing long-term damage from global warming. The book offers one of the most extensive analyses of the economic and environmental dynamics of greenhouse-gas emissions and climate change and provides the tools to evaluate alternative approaches to slowing global warming. The author emphasizes the need to establish effective mechanisms, such as carbon taxes, to harness markets and harmonize the efforts of different countries.

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A Question of Balance: Weighing the Options on Global Warming Policies

outcomes, and noncooperative equilibria. This study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies; that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries; and that high-income countries may be the major losers from cooperation. (JEL H41, Q4, Q2, Q20)

https://www.jstor.org/stable/pdfplus/2118303.pdf

A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies

The marginal damage costs of carbon dioxide emissions: An assessment of the uncertainties

MERGE. A model for evaluating regional and global effects of GHG reduction policies

As competition is introduced into the electric power industry, access and pricing policy for transmission will play a pivotal role in shaping future market structure and performance. The externalities associated with the loop flow phenomenon in an electric power network constitute a significant barrier to the formation of efficient markets for electricity and transmission services. In this paper, we present a new approach to the design of an efficient market mechanism for transmission access that resolves these externalities. Under a trading rule that combines the Coasian and the Pigouvian principles to resolution of externalities, property rights are defined so that a competitive market could be established for transmission services and electricity to achieve a social optimum within a power pool. We characterize a dynamic trading process which is Lyapunov stable and always converges to a competitive equilibrium. Finally, we discuss some practical applicability and long-term investment issues.

A market mechanism for electric power transmission

We present an economic growth and energy use model incorporating representations of greenhouse gas accumulation, global mean temperature rise, and the damage cost associated with this temperature rise. Under alternative assumptions about the damage cost function, we find optimal time paths of CO, emissions control and associated optimal carbon taxes. Our work indicates that with plausible assumptions, an optimal carbon tax will rise over time, in contrast to the "hump shaped" carbon taxes implied by C02 reduction policies currently being discussed. Our work also suggests that the damage cost function would have to be both high and nonlinear in order to justify the general level of CO2 control and carbon taxes implied by these policies.

https://www.jstor.org/stable/info/41322454

CETA: A Model for Carbon Emissions Trajectory Assessment

Global warming uncertainties and the value of information: an analysis using CETA

In this paper we extend our earlier work with the Carbon Emissions Trajectory Assessment model (CETA) to consider a number of issues relating to the nature of optimal carbon emissions trajectories. We first explore model results when warming costs are associated with the rate of temperature rise, rather than with its level, as in our earlier work. We find that optimal trajectories are more strongly affected by the degree of non-linearity in the warming cost function than by whether the cost function is driven by the warming level or the warming rate. Next we briefly explore the implications of simple uncertainty and risk aversion for optimal emissions trajectories. We find that uncertainty and risk aversion cause optimal emissions trajectories to be somewhat lower, but that the effect is not noticeable in the near term and not dramatic in the long term; the long term effect on the shadow price of carbon is more marked, however. Finally, we experiment with scaling up the warming cost functions until optimal policies are approximately the same as a policy of stabilizing emissions at the 1990 level. Based on the results of this experiment, we conclude that damages would have to be very high to justify anything like a stabilization policy; and even in this case, a policy allowing intertemporal variation in emissions would be better.

Optimal carbon emissions trajectories when damages depend on the rate or level of global warming

This paper examines market design issues for reliability management in competitive power markets The institutional structure is characterized by a power exchange that conducts electricity market trading, a system operator that operates the electric power system, and a property right system for transimission pricing In a competitive market, priority insurance fosters market information for determining efficient system reliability levels and induces system operator to maintain system security efficiently A six-node network example is examined to illustrate the basic insights

Stephen C. Peck

Papers

A market mechanism for electric power transmission

CETA: A Model for Carbon Emissions Trajectory Assessment

Global warming uncertainties and the value of information: an analysis using CETA

Optimal carbon emissions trajectories when damages depend on the rate or level of global warming

Reliability Management in Competitive Electricity Markets