ECON32111 Climate Change Economics
SAMPLE EXAMINATION
2024-25
Answer THREE Questions -
ALL questions carry equal marks
1. Assume the CO2 concentration in the atmosphere increases from 280 ppm in pre- industrial times to 560 ppm by the year 2100.
a) Discuss the temperature increase, T, relative to pre-industrial times you associate with this doubling of the CO2 concentration. Base your discussion on the course material.
b) According to Tol (2014, corrected version) the global welfare impact from a temperature increase, T, by 2100 can be expressed as D = 1.26T − 0.66T2 where D denotes the percentage change in global GDP. Explain how you would use this expression to compute today’s value of the future impacts of a temperature increase.
c) As we discussed in class, Tol has redone his impact assessment several times because more economic estimates have become available. What would be the percentage change in global GDP of the temperature based on Tol’s most recent study?
2. Discuss climate sensitivity and its role in economic models about the trade-offs between consumption, emissions, and climate over time.
3. Image a climate policy that has impacts with benefits far in the future. Explain and discuss the main argument in favour of a declining discount rate in the economic analysis of these policy benefits.
4. Assume your boss is a busy politician. She has just attended a meeting about long term public investment projects. An important issue was the secondary impacts of climate change policies. She heard that these generate important and immediate benefits for society. She is now very confused. Explain to her the significance of secondary benefits for climate change policies and whether and how these should be included in Cost Benefit Analysis of climate change policy options. Your boss graduated with an economics degree, but this was a long time ago and she has forgotten many details.
5. Explain why it is so hard to achieve international agreement on climate change policy.