The Economics of the Global Environment

1. Front Matter

   Pages i-vii

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2. The Economics of the Global Environment—Catastrophic Risks in Theory and Practice

   • Graciela Chichilnisky, Armon Rezai

   Pages 1-14

3. Catastrophic Risk in Economic Theory

   1. Front Matter

      Pages 15-15

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   2. Catastrophic Risk, Rare Events, and Black Swans: Could There Be a Countably Additive Synthesis?

      • Peter J. Hammond

      Pages 17-38

   3. Preference Representations for Catastrophic Risk Analysis

      • Richard E. Ericson, Jamie L. Kruse

      Pages 39-69

   4. Modeling Decisions Involving Ambiguous, Vague, or Rare Events

      • Louis Narens, Donald Saari

      Pages 71-87

   5. Modeling Uncertainty, Context, and Information Fusion via Lattice-Based Probability

      • Jun Zhang, Roman Ilin

      Pages 89-116

   6. The Foundations of Uncertainty with Black Swans

      • Graciela Chichilnisky

      Pages 117-128

   7. The Topology of Change Foundations of Probability with Black Swans Dedicated to the Memory of Jerrold Marsden

      • Graciela Chichilnisky

      Pages 129-146

   8. Sustainable Markets with Short Sales

      • Graciela Chichilnisky

      Pages 147-162

4. Ethical and Welfare Considerations

   1. Front Matter

      Pages 163-163

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   2. Sustainable Recursive Social Welfare Functions

      • Geir B. Asheim, Tapan Mitra, Bertil Tungodden

      Pages 165-190Open Access

   3. Intergenerational Equity, Efficiency, and Constructibility

      • Luc Lauwers

      Pages 191-206

   4. Sustainable Exploitation of a Natural Resource: A Satisfying Use of Chichilnisky’s Criterion

      • Charles Figuières, Mabel Tidball

      Pages 207-229

   5. The Axiomatic Approach to the Ranking of Infinite Streams

      • Luc Lauwers

      Pages 231-255

5. The Environment in a Global Context

   1. Front Matter

      Pages 257-257

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   2. Nested Externalities and Polycentric Institutions: Must We Wait for Global Solutions to Climate Change Before Taking Actions at Other Scales?

      • Elinor Ostrom

      Pages 259-276

   3. Capital Growth in a Global Warming Model: Will China and India Sign a Climate Treaty?

      • Prajit K. Dutta, Roy Radner

      Pages 277-310

   4. Unspoken Ethical Issues in the Climate Affair: Insights from a Theoretical Analysis of Negotiation Mandates

      • Franck Lecocq, Jean-Charles Hourcade

      Pages 311-340

   5. Carbon Leakages: A General Equilibrium View

      • Jean-Marc Burniaux, Joaquim Oliveira Martins

      Pages 341-363

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.

• Catastrophic Risks
• Economic Theory
• Extreme Events
• Global Environment
• Risk Management
• Climate change management
• climate change

• Columbia University, New York, USA

  Graciela Chichilnisky

• Department of Socio-Economics, Vienna University of Economics and Business, Vienna, Austria

  Armon Rezai

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) (http://columbiariskmanagement.net), 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 (http://globalthermostat.com). 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.

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