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Greenhouse gas policies confront the trade-off between the costs of reducing emissions and the benefits of avoided climate change. The risk of uncertain and potentially irreversible catastrophes is an important issue related to the latter, and one that has not yet been well incorporated into...
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We analyse optimal investment in one of the most important forms of climate adaptation: flood protection. Investments … the level of flood protection for some time. Investment decisions must take into account both economic and sea level rise … tractable macro-finance DSGE model that includes flood risk. We obtain solutions for optimal flood protection as a function of …
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