Research Publication

Abstract:

We explore how uncertainty about climate change operates through multiple channels and shapes prudent policy dynamics. Drawing on and extending insights from asset pricing, we confront “deep uncertainties” and highlight their importance for constructing robustly optimal policies and social valuations. Using an example economy, we quantify the tradeoff between reducing fossil fuel emissions today versus waiting until more is known about future economic consequences of climate change. We also show that heightened uncertainty concerns about substantial but remote advances in clean energy technology lead to more proactive investment in research and development across a substantively interesting range of parameter settings.

Appendix

Associated Notebook

Keywords—uncertainty, climate policy, research and development, social valuation

@article{barnett2024uncertainty,
  title={Uncertainty, Social Valuation, and Climate Change},
  author={Barnett, Michael L and Brock, William A and Zhang, Hong and Hansen, Lars Peter},
  year={2026}
}