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Climate Policy and Uncertainty: α–Precautionary Principle Versus Real Options Analysis

August 2012

Citation: ELR 10733

Author: Alexander A. Golub

Significant uncertainties exist on the climate side of the analysis. The key issue is how quantitative methods of economic analysis and risk management can help to make the best
possible decision given incomplete information. In other words, how can modern tools for economic analysis help policymakers process available information and make a decision that balances benefits and risks. The integrated assessment framework, described in this paper, provides a convenient analytical tool.

Alexander A. Golub, Ph.D., is an Associate Professor at American University and a consultant for the Environmental Defense Fund.

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