The irreversibility effect in environmental decisionmaking

Urvashi Narain, Michael Hanemann, Anthony Fisher

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

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

Keywords

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

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

Fingerprint

Dive into the research topics of 'The irreversibility effect in environmental decisionmaking'. Together they form a unique fingerprint.

Cite this