September 1, 2006
Journal Article

Optimal Technology R&D in the Face of Climate Uncertainty

Abstract

This paper explores optimal near-term technology R&D in the face of uncertain damages caused by the buildup of greenhouse gases. The paper puts particular emphasis on understanding how optimal near-term R&D expenditures might vary based on the technologies pursued in the R&D program. The exploration is conducted in the context of varying impacts from R&D on the global abatement cost function. The R&D planning problem is considered first within a theoretical framework and is then pursued in a stylized application using the DICE model. The paper provides intuition into the circumstances under which near-term technology R&D might increase or decrease under uncertainty, thereby serving as a hedge against climate uncertainty.

Revised: October 2, 2006 | Published: September 1, 2006

Citation

Baker E.D., L.E. Clarke, and J. Weyant. 2006. Optimal Technology R&D in the Face of Climate Uncertainty. Climatic Change 78, no. 1:157-179. PNNL-SA-45911.