The irreversibility effect in environmental decisionmaking

Urvashi Narain, William Hanemann, Anthony Fisher

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

We provide a new, more general, definition for the irreversibility effect and demonstrate its relevance to problems involving environmental and other decisions under uncertainty. We establish several analytical and numerical results that suggest both that the effect holds more widely than generally recognized, and that an existing result (Epstein's Theorem), giving a sufficient condition for determining whether the effect holds, can be applied more widely than previously indicated, in particular to problems involving intertemporally nonseparable benefit functions. We further show that a low elasticity of intertemporal substitution will however result in failure of the effect.

Original languageEnglish (US)
Pages (from-to)391-405
Number of pages15
JournalEnvironmental and Resource Economics
Volume38
Issue number3
DOIs
StatePublished - Nov 2007
Externally publishedYes

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elasticity
substitution
effect
Irreversibility
Decision making
decision
Decision under uncertainty
Elasticity of intertemporal substitution

Keywords

  • Decisionmaking under uncertainty
  • Irreversibility effect
  • Necessary and sufficient conditions
  • Nonseparable benefit functions

ASJC Scopus subject areas

  • Economics and Econometrics
  • Environmental Science (miscellaneous)

Cite this

The irreversibility effect in environmental decisionmaking. / Narain, Urvashi; Hanemann, William; Fisher, Anthony.

In: Environmental and Resource Economics, Vol. 38, No. 3, 11.2007, p. 391-405.

Research output: Contribution to journalArticle

Narain, Urvashi ; Hanemann, William ; Fisher, Anthony. / The irreversibility effect in environmental decisionmaking. In: Environmental and Resource Economics. 2007 ; Vol. 38, No. 3. pp. 391-405.
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