Pricing Uncertainty Induced by Climate Change

Michael Barnett, William A. Brock, Lars Peter Hansen

2019 | Academic | Climate, Risk & Performance

How can we assess both climate and emissions impacts, as well as uncertainty in the broadest sense, in social decision-making? We provide a framework for answering this question by embracing recent decision theory and tools from asset pricing, and we apply this structure with its interacting components in a revealing quantitative illustration.