The Economics of the Global Environment: Catastrophic Risks in Theory and Policy

The Economics of the Global Environment: Catastrophic Risks in Theory and Policy

Paperback(Softcover reprint of the original 1st ed. 2016)

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This is the first book combining research on the Global Environment, Catastrophic Risks and Economic Theory and Policy. Modern economic theory originated in the middle of the twentieth century when industrial expansion coupled with population growth led to a voracious use of natural resources and global environmental concerns. It is uncontested that, for the first time in recorded history, humans dominate the planet, changing the planet's atmosphere, its bodies of water, and the complex web of species that makes life on earth. This radical change in circumstances led to rethinking of the foundations of human organization and, in particular, the industrial economy and the economic theory behind it. This book brings together new approaches on multiple levels: environmental sustainability requires rethinking in terms of economic theory and policy as well as the considerations of catastrophic risk and extremal events. Leading experts address questions of economic governance, risk management, policy decision making and distribution across time and space.

Product Details

ISBN-13: 9783319811604
Publisher: Springer International Publishing
Publication date: 07/27/2018
Series: Studies in Economic Theory , #29
Edition description: Softcover reprint of the original 1st ed. 2016
Pages: 649
Product dimensions: 6.10(w) x 9.25(h) x (d)

About the Author

Graciela Chichilnisky is the author of the carbon market of the UN Kyoto Protocol that became international law in 2005. She also created the concept of Basic Needs voted by 153 nations at the 1993 UN Earth Summit to be the cornerstone of Sustainable Development, and in 1996 created the formal theory of Sustainable Development that is used worldwide. Chichilnisky is a world renowned economist and mathematician that the Washington Post calls an “A-List Star” and appeared in the 2009 Time Magazine on “Heroes of the Environment”. Chichilnisky acted as a US Lead Author of the Intergovernmental Panel on Climate Change, which received the 2007 Nobel Prize. A special adviser to several UN organizations, heads of state and US Congress, her pioneering work uses innovative market mechanisms to reduce carbon emissions, conserve biodiversity and ecosystem services. Chichilnisky has a Masters and a PhD in Mathematics from MIT and UC Berkeley and a second PhD in Economics from UC Berkeley. She has taught at Harvard University, Stanford and Columbia University. Dr. Chichilnisky is a Professor of Economics and Mathematical Statistics at Columbia University, Director of Columbia Consortium for Risk Management (CCRM) (, a former Senator and UNESCO Chair in Mathematics and Economics at Columbia University, and currently the Sir Louis Matheson Distinguished Professor at Monash University in Melbourne, Distinguished Visiting Professor at Nankai University and at Beijing Normal University in China, and a Founder and Managing Director of Global Thermostat LLC ( Dr. Chichilnisky has authored 14 books and over 250 articles published in leading academic journals including Nature, American Economic Review, Transactions of the American Mathematical Society, and the Journal of Mathematical Economics, as well as popular news media outlets, such as Time Magazine and the Financial Times. She is a frequent commentator on CNN, ABC, BBC TV News, and Bloomberg News. Her most recent books are Saving Kyoto, published in fall 2009, and The Economics of Climate Change, published in fall 2010. Dr. Chichilnisky was from 1985-1990 the Founder, Chairman and CEO of a successful financial telecommunications company, FITEL, that was sold in Japan, and from 2000-2004 the CEO and Chairman of a successful financial technology company, Cross Border Exchange, owned by JP Morgan. She is an advisor to the Capital Institute, a member of the UK Climate Bonds Initiative, a former member of the Board of Trustees of the National Resources Defense Council, the Mediterranean College and of editorial boards of leading professional journals, including Advances in Applied Mathematics, Review of Economic Studies, Economic Letters, Journal of International Trade and Economic Development and Journal of Development Economics. A Member of the American Mathematical, Statistical, Economic and Chemical Associations, Chichilnisky is listed in Who’s Who in the World, Who’s Who in America, Who is Who of American Women, Who’s Who in Science and Engineering, Who’s Who in Education and in the Dictionary of International Biography among the world’s 1,000 most outstanding scientists of the 21st century. In 2007 she was identified by Hispanic Business among the top 10 most influential Latinos in the US. A native of Argentina, Professor Chichilnisky is a U.S. citizen, the mother of two children, and a resident of New York City.

Armon Rezai is associate professor in environmental economics at the Vienna University of Economics and Business (WU), researcher at the International Institute for Applied Systems Analysis (IIASA), and an external research affiliate at the Oxford Centre for the Analysis of Resource Rich Economies (Oxcarre) of Oxford University. He has published widely on macroeconomic topics, such as growth and distribution, and their application to environmental problems like climate change in numerous economic as well as the popular press. Before joining his current department, he earned a doctorate in economics from The New School for Social Research and worked at the United Nations University's World Institute for Development Economics Research in Helsinki. He has provided consultations to the World Bank and the Austrian National Bank (OeNB) and has been a Fulbright fellow and a visiting fellow at the University of California at Berkeley.

Table of Contents

Part I. Catastrophic risk in economic theory.- Catastrophic Risk, Rare Events, and Black Swans: Toward an Alternative Synthesis.- Preference Representations for Catastrophic Risk Analysis.- Modeling Decisions Involving Ambiguous, Vague, or Rare Events.- Modeling Uncertainty, Context and Information Fusion via Lattice-Based Probability.- The foundations of uncertainty with black swans.- The Topology of Change.- Sustainable markets with short sales.- Part II. Ethical and welfare considerations.- Sustainable recursive social welfare functions.- Intergenerational equity, efficiency, and constructability.- Sustainable exploitation of a natural resource: a satisfying use of Chichilnisky’s criterion.- The axiomatic approach to the ranking of infinite streams.- Part III. The environment in a global context.- Nested externalities and polycentric institutions: must we wait for global solutions to climate change before taking actions at other scales?.- Capital growth in a global warming model: will China and India sign a climate treaty?.- Unspoken ethical issues in the climate affair: Insights from a theoretical analysis of negotiation mandates.- Carbon leakages: a general equilibrium view.- Part IV. The case of climate change.- Chaos Control - Climate Stabilization by Closing the Global Carbon Cycle.- Climate Change and Social Choice Theory.- Discounting and the evaluation of climate policy.- Global warming and economic externalities.- Part V. Economic policy and regulation.- Detrimental externalities, pollution rights, and the “Coase theorem”.- Taxes versus quantities for a stock pollutant with endogenous abatement costs and asymmetric information.- Walrasian prices in markets with tradable rights.- Part VI. Catastrophic risk in economic practice.- Exploring the role of emotions in decisions involving catastrophic risks: Lessons from a double investigation.- How the change of risk announcement on catastrophic disaster affects property prices.- Modeling US stock market volatility-return dependence using conditional Copula and quantile regression.- Economic Crises: Natural or Unnatural Catastrophes?

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