Given the large uncertainties regarding potential damages from climate change and the significant but also uncertain costs of reducing greenhouse gas emissions, the debate over a policy responce is often framed as a choice of acting now or waiting until the uncertainty is reduced. I demonstrate in the general case that the ability to learn in the future can lead to either less restrictive or more restrictive policies today. I also show that initial decision made under uncertainty will be affected by future learning only if the actions taken today change the marginal costs or marginal damages in the future.

Author names: 
Webster, M.
Year: 
2002
Reference: 

Webster, M. (2002). The Curious Role of Learning in Climate Policy: Should We Wait for More Data? The Energy Journal, 0(Number 2), 97–119.

Geographical area: 
Policy areas considered: