Dark Clouds or Silver Linings? Knightian Uncertainty and Climate Change

This paper examines the impact of Knightian uncertainty upon optimal climate policy through the prism of a continuous-time real option modelling framework. We analytically determine optimal intertemporal climate policies under ambiguity. Additionally, numerical simulations are provided to illustrate the properties of the model. The results indicate that increasing Knightian uncertainty accelerates climate policy, i.e. policymakers become more reluctant to postpone the timing of climate policies into the future.

• Publication year

  2011

• Venue

  Social Science Research Network

• Publication date

  2011-07-21

• Fields of study

  Geography, Economics, Environmental Science

• Identifiers
  DOI 10.2139/ssrn.1891835
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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