A Study on Climate Risk and Optimal Investment Scale for Climate Change: An Analysis of IPCC AR6 Scenarios

doi:10.15266/KEREA.2025.34.4.405

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2025 Vol.34, Issue 4 Next Page

Research Paper

A Study on Climate Risk and Optimal Investment Scale for Climate Change: An Analysis of IPCC AR6 Scenarios 기후변화 리스크와 적정 기후변화 투자 규모에 관한 연구: IPCC AR6 시나리오 분석: 박호정*‧허윤지**‧조홍종***
Hojeong Park*, Yunji Her**, and Hong Chong Cho***; *고려대학교 식품자원경제학과 교수, 제1저자
**단국대학교 경제학과 조교수, 교신저자(e-mail: yjher@dankook.ac.kr)
***단국대학교 경제학과 교수, 공저자(e-mail: hongcho@dankook.ac.kr)

*Professor, Department of Food and Resource Economics, Korea University, First author
**Assistant Professor, Department of Economics, Dankook University, Corresponding author (e-mail: yjher@dankook.ac.kr)
***Professor, Department of Economics, Dankook University, Coauthor (e-mail: hongcho@dankook.ac.kr)

31 December 2025. pp. 405-421

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Abstract

The IPCC 6th report is analyzed by examining the property of fat-tail distribution in the global mean temperature forecasts. Using the extreme risk from the fat-tail distribution and CRRA utility function, the global effort level to mitigate the increase of mean temperature is studied in a model which incorporates the stochastic and irreversible nature of investment. The study finds that the fat-tail risk significant in the IPCC AR6 scenario, the result suggests the 2.5–4.0% of global WTP to curb the phase of climate change.

Keywords

Climate change

Fat-tail risk

IPCC AR6

Real options model

본 연구는 IPCC 6차 평가보고서(AR6)의 온도 예측에 내재된 ‘두터운 꼬리 리스크(fat-tail risk)’에 초점을 맞추어, 기후변화 완화에 필요한 최적의 글로벌 투자 규모를 분석한다. 이를 위해 완화 투자의 확률적이고 비가역적인 특성을 반영한 실물옵션 모형과 위험 회피도를 고려하기 위한 CRRA 효용함수를 사용하였다. 분석 결과는 IPCC AR6 시나리오에 존재하는 상당한 수준의 두터운 꼬리 리스크를 고려하였을 때, 기후변화의 진행을 효과적으로 억제하기 위해 전 세계 GDP의 2.5-4.0%에 해당하는 지불의사액이 필요함을 시사하며, 이는 대규모 기후 행동에 대한 정량적 근거를 제공한다.

키워드

기후변화

두터운 꼬리 리스크

IPCC 6차 평가보고서

실물옵션 모형

References

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Hwang, I. C., R. S. J. Tol, and M. W. Hofkes, “Fat-tailed risk about climate change and climate policy,” Energy Policy, Vol. 89, 2016, pp. 25~35. 10.1016/j.enpol.2015.11.012
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Information

Publisher :Environmental and Resource Economics Review
Publisher(Ko) :자원 · 환경경제연구
Journal Title :자원·환경경제연구
Journal Title(Ko) :Environmental and Resource Economics Review
Volume : 34
No :4
Pages :405-421
DOI :https://doi.org/10.15266/KEREA.2025.34.4.405

[1] Conte, M. N., and D. L. Kelly, “Understanding the Improbable: A Survey of Fat Tails in Environmental Economics,” Annual Review of Resource Economics, Vol. 13, 2021, pp. 289~310. 10.1146/annurev-resource-102020-094143

[2] Daniel, K. D., R. B. Litterman, and G. Wagner, “Applying Asset Pricing Theory to Calibrate the Price of Climate Risk,” NBER Working Paper, 2018.

[3] Dietz, S., and N. Stern, “Why Economic Analysis Supports Strong Action on Climate Change: a Response to the Stern Review’s Critics,” Review of Environmental Economics and Policy, Vol. 2, 2008, pp. 94~113. 10.1093/reep/ren001

[4] Hwang, I. C., R. S. J. Tol, and M. W. Hofkes, “Fat-tailed risk about climate change and climate policy,” Energy Policy, Vol. 89, 2016, pp. 25~35. 10.1016/j.enpol.2015.11.012

[5] IEA, Energy and Climate Change, 2015.

[6] IPCC, 2018: Global Warming of 1.5°C, 2019.

[7] IPCC, Climate Change 2007: Impacts, Adaptation and Vulnerability, 2007.

[8] IPCC, Climate Change 2021: The Physical Science Basis, 2021a.

[9] IPCC, IPCC Sixth Assessment Report, Working Group 1: The Physical Science Basis, 2021b.

[10] NASA, Graphic: Carbon dioxide hits new high, 2013.

[11] Nordhaus, W. D., “Revisiting the social cost of carbon,” Proc Natl Acad Sci USA, Vol. 114, 2017, pp. 1518~1523. 10.1073/pnas.1609244114 28143934 PMC5321009

[12] Pindyck, R., “Uncertain Outcomes and Climate Change Policy,” Journal of Environmental Economics and Management, Vol. 63, 2012, pp. 289~303. 10.1016/j.jeem.2011.12.001

[13] Ritchie, H., and M. Roser, CO₂ emission, 2024.

[14] Weitzman, M., “Fat-Tailed Uncertainty in the Economics of Catastrophic Climate Change,” Review of Environmental Economics and Policy, Vol. 5, 2011, pp. 275~292. 10.1093/reep/rer006

[15] Weitzman, M., “On modeling and Interpreting the Economics of Catastrophic Climate Change,” Review of Economics and Statistics, Vol. 91, 2009, pp. 1~19. 10.1162/rest.91.1.1

[16] Weitzman, M., “What is the ‘damage function’ for global warming-and what difference might it make?” Climate Change Economics, Vol. 1, 2010, pp. 57~69. 10.1142/S2010007810000042

자원·환경경제연구 ISSN:1229-9146(Print) Environmental and Resource Economics Review

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