# Economics-AW750

## Economics-AW750 Online Services

Question 1) Conduct a cost benefit analysis of climate change under the following scenarios. For each scenario, find the value of the interest rate that would equate the present value of the benefits and costs of mitigation. You are encouraged to use excel, and to calculate costs and benefits for every year in a separate column.

a. The cost of mitigation is a one-time payment of 1\$. Damages averted amount to one time value of 100\$ in 50 years.
b. The cost of mitigation is a one-time payment of 1\$. Damages averted amount to a value of 100\$ per year, for every year between 2050 and 2100.

c. The cost of mitigation is an annual payment of 1\$ between 2020 and 2050. Damages averted amount to a value of 100\$ per year, for every year between 2050 and 2100.
d. The cost of mitigation is an annual payment of between 2020 and 2100 which starts off at 1\$ per year, but declines at a rate of 0.02 per year. Damages averted amount to an annual value between 2050 and 2100, that starts off at 100\$ and increases at a rate of 3% per year.

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## Related Services

For the following questions, use the formula for calculating an infinite geometric sum.

e. Repeat question b but treat damages as perpetual instead of ending at 2100.
f. Repeat question c but treat both the costs and the damages as perpetual instead of ending at 2050 and 2100.
g. Repeat question c but treat both the costs and the damages as perpetual instead of ending at 2050 and 2100.

Question 2) A growing literature in economics attempts to estimate the future impacts of climate change by utilizing historical fluctuations in whether. Choose one such study and summarize it for the class. You may choose one of the papers suggested below or choose any paper of your liking which utilizes an appropriate econometric method.

When presenting your paper, discuss briefly

• The issue it investigates
• The method and data used
• The main results (the historical effect that is found and the resulting projection for climate change)
• Weaknesses and Strengths

Product code: Economics-AW750