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How does climate-change mitigation affect the aggregate consumption risk borne by future generations? In other words, what is the ‘climate beta’? In this paper we argue using a combination of theory and integrated assessment modelling that the climate beta is positive and close to unity for maturities of up to about one hundred years. This is because the positive effect on the climate beta of uncertainty about exogenous, emissions-neutral technological progress overwhelms the negative effect on the climate beta of uncertainty about the carbon-climate-response, particularly the climate sensitivity, and the damage intensity of warming. Mitigating climate change therefore has no insurance value to hedge the aggregate consumption risk borne by future generations. On the contrary, it increases that risk, which justifies a relatively high discount rate on the expected benefits of emissions reductions. However, the stream of undiscounted expected benefits is also increasing in the climate beta, and this dominates the discounting effect so that overall the net present value of carbon emissions abatement is increasing in the climate beta. [ABSTRACT FROM AUTHOR]

Foreign aid allocation by donor countries to developing economies is known to be motivated by the donor country's bilateral trade interests. Does this apply also to bilateral climate aid? In this paper, we combine theoretical and empirical analyses to investigate how bilateral trade affects donor countries' allocations of bilateral climate aid. Our theoretical analysis develops a simple model to support our hypothesis that bilateral trade has a positive impact on climate aid transfers. The model highlights the terms-of-trade and positive income effects of climate aid, and predicts a positive relationship between donor countries' exports to and imports from recipient countries and their climate aid transfers. The empirical analysis is based on bilateral climate aid data for 2002 to 2017. We employ fixed effects and instrumental variable-2 stage least square estimations (IV-2SLS) with a shift-share instrument to overcome the endogeneity of trade. Our empirical results show that donors' exports have a significant, robust, positive effect on climate aid transfers. [ABSTRACT FROM AUTHOR]

Pro-environmental behaviors are an important avenue for mitigating environmental impacts. Technological improvements are also a vital tool for reducing environmental damage from consumption. However, their benefits are partially offset by the direct rebound effect, whereby a consumer rationally responds to an increase in resource use efficiency by consuming more. This paper investigates whether technological improvement might also reduce behaviorally motivated mitigation of environmental damage. A behavioral rebound effect operates through two channels. First, pro-environmental effort is reduced after a decrease in marginal environmental damage. Second, moral licensing reduces pro-environmental effort further when technological change is endogenous. I develop a novel real effort laboratory experiment to identify these behaviors. I find a positive behavioral rebound effect. I also find evidence consistent with moral licensing, which is strongest among subjects with a higher degree of pro-environmental attitudes and beliefs. Subjects' baseline level of pro-environmental effort is driven by beliefs about social norms. [ABSTRACT FROM AUTHOR]