Valuation when disaster risks increase at an increasing rate

Document Type

Article

Publication Date

3-1-2023

Abstract

Atmospheric CO2 been growing at an increasing rate for many years and this suggests that investments may face an increasing rate of future disaster risk. We provide a simple variation of the Gordon Growth model that accounts for potential increasing disaster risks and provides a closed-form bound to the reduction in value.

Publication Source (Journal or Book title)

Economics Letters

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