New techniques for estimating household climate preferences (and the benefits and costs of climate change)

Murray, Thomas (2013). New techniques for estimating household climate preferences (and the benefits and costs of climate change). University of Birmingham. Ph.D.

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Abstract

In order to make an informed decision on the optimal reduction in greenhouse gas emissions it is necessary to understand fully the damage costs of climate change. However, current modelling techniques fail to provide adequate emphasis on important components of the costs and benefits of avoided climate change. This approach risks over or underestimating true damage costs. Disregard for the amenity value that climate may hold and assumptions that restrict geographic mobility and determine the rate of social discounting may all contribute to significant error. Using spatial variations as an analogue for future climate change, this thesis finds that climate is important in determining the desirability of migration destinations and holds substantial amenity value. It also concludes that more work is required to be confident in assuming an elasticity of marginal utility equal to unity. Alternative techniques, including subjective wellbeing and hypothetical equivalence scales, are utilised to avoid having to make potentially restrictive assumptions on preferences for climate. Finally, this thesis stresses the importance of accounting for measurement error in cross-sectional survey data on household income. It seeks to inform how an econometrician can seek to implement appropriate instrumental variables to overcome this error.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):