Climate Policy Under Intergenerational Discounting

In this thesis, Orlando Zaddach applies a discounting scheme derived by Krysiak (2010) in the latest DICE model and presents its implications for optimal climate policy. Furthermore, he carries out a one-factor-at-a-time (OFAT) sensitivity analysis to check the discounting scheme for robustness. It turns out that the proposed discounting scheme fails in incorporating consumer sovereignty and intergenerational equity sufficiently.

The full effects of decisions made today about many environmental policies -including climate change and nuclear waste- will not be felt for many years. For issues with long-term ramifications, analysts often employ discount rates to compare present and future costs and benefits. This is reasonable, and discounting has become a procedure that raises few objections. But are the methods appropriate for measuring costs and benefits for decisions that will have impacts 20 to 30 years from now the right ones to employ for a future that lies 200 to 300 years in the future? This landmark book argues that methods reasonable for measuring gains and losses for a generation into the future may not be appropriate when applied to a longer span of time. Paul Portney and John Weyant have assembled some of the world's foremost economists to reconsider the purpose, ethical implications, and application of discounting in light of recent research and current policy concerns. These experts note reasons why conventional calculations involved in discounting are undermined when considering costs and benefits in the distant future, including uncertainty about the values and preferences of future generations, and uncertainties about available technologies. Rather than simply disassemble current methodologies, the contributors examine innovations that will make discounting a more compelling tool for policy choices that influence the distant future. They discuss the combination of a high shout-term with a low long-term diescount rate, explore discounting according to more than one set of anticipated preferences for the future, and outline alternatives involving simultaneous consideration of valuation, discounting and political acceptability.

The full effects of decisions made today about many environmental policies -including climate change and nuclear waste- will not be felt for many years. For issues with long-term ramifications, analysts often employ discount rates to compare present and future costs and benefits. This is reasonable, and discounting has become a procedure that raises few objections. But are the methods appropriate for measuring costs and benefits for decisions that will have impacts 20 to 30 years from now the right ones to employ for a future that lies 200 to 300 years in the future? This landmark book argues that methods reasonable for measuring gains and losses for a generation into the future may not be appropriate when applied to a longer span of time. Paul Portney and John Weyant have assembled some of the world's foremost economists to reconsider the purpose, ethical implications, and application of discounting in light of recent research and current policy concerns. These experts note reasons why conventional calculations involved in discounting are undermined when considering costs and benefits in the distant future, including uncertainty about the values and preferences of future generations, and uncertainties about available technologies. Rather than simply disassemble current methodologies, the contributors examine innovations that will make discounting a more compelling tool for policy choices that influence the distant future. They discuss the combination of a high shout-term with a low long-term diescount rate, explore discounting according to more than one set of anticipated preferences for the future, and outline alternatives involving simultaneous consideration of valuation, discounting and political acceptability.

Dialogue on global warming has progressed from the Kyoto Protocol to meetings in Copenhagen and Cancun and will soon resume in meetings in South Africa. Some observers consider the Copenhagen conference a failure. EU representatives, in contrast, present an optimistic evaluation of achieving a global temperature rise limit of not more than 2°C by 2100. Geoscience researchers and lead investigators of the Intergovernmental Panel on Climate Change (IPCC) have supported CO2 emission reduction pledges and contend that we can achieve the 2°C limit through international coordination. This position conflicts with evaluations of United States Congressional and Presidential advisors, who do not believe the Copenhagen CO2 reduction commitments can hold the global warming increase to below 2°C and who have not supported the agreement. Developing countries are alarmed, because climate change is expected to hit them hardest. The developed world will use energy to mitigate global warming effects, but developing countries are more exposed by geography and poverty to the most dangerous consequences of a global temperature rise. The Oxford Handbook of the Macroeconomics of Global Warming analyzes the macroeconomics of global warming, especially the economics of possible preventative measures, various policy changes, and potential effects of climate change on developing and developed nations.

The social cost of carbon (SC-CO2) is an economic metric intended to provide a comprehensive estimate of the net damages - that is, the monetized value of the net impacts, both negative and positive - from the global climate change that results from a small (1-metric ton) increase in carbon-dioxide (CO2) emissions. Under Executive Orders regarding regulatory impact analysis and as required by a court ruling, the U.S. government has since 2008 used estimates of the SC-CO2 in federal rulemakings to value the costs and benefits associated with changes in CO2 emissions. In 2010, the Interagency Working Group on the Social Cost of Greenhouse Gases (IWG) developed a methodology for estimating the SC-CO2 across a range of assumptions about future socioeconomic and physical earth systems. Valuing Climate Changes examines potential approaches, along with their relative merits and challenges, for a comprehensive update to the current methodology. This publication also recommends near- and longer-term research priorities to ensure that the SC- CO2 estimates reflect the best available science.

Global climate change has emerged to become one of the most challenging and controversial policy issues. Ìn this volume a group of scholars e×amines economic and social aspects of the phenomenon including discounting and intergenerational equity, and the role of cost-benefit analysis.

Climate Change, Justice and Future Generations is a valuable contribution to the debate on both theoretical and applied justice in climate change, and it fills a manifest gap in the current literature. Marco Grasso, International Environmental Agreements Page effectively marries the issues raised by climate change science with analytical philosophy to provide a perspective on why or why not measures should be taken to reduce climate change and the risks/harm it poses for future generations. . . a valuable book for politicians and policy makers who seek to change the world and manage its climate. Antoinette M. Mannion, Electronic Green Journal We are badly in need of ways of understanding global problems that go beyond the current economic paradigms. Climate Change, Justice and Future Generations helps us with this task by effectively linking climate change with some important mainstream work on political justice. It should be a very useful book not just for the classroom and the academy, but also for the realm of policy. Stephen Gardiner, University of Washington, US The book begins with a detailed account of the science of climate change that is user friendly for non-scientists without sacrificing depth. . . Page s analysis is impressive in both its scope and execution, and has a relevance and potential appeal in a number of fields. Kerri Woods, Political Studies Review Climate Change, Justice and Future Generations is an authoritative, analytical and extremely scholarly integration of scientific and technical information, empirical data and modelling concerning global climate change and high-level normative analysis. Page convincingly and patiently lays out the argument, including the ways in which climate change challenges settled modes of ethical thought, despite it being one of the most, if not the, important ethical issues of the age. As a book on both theoretical and applied ethics it makes an important contribution to the field. John Barry, Queen s University Belfast, UK What the climate change policy called Contraction and Convergence has lacked until now is an authoritative theoretical grounding. Here Ed Page puts this right. In masterful fashion, he dissects the issues at stake in designing climate change policy, and leaves his readers in no doubt that there is a fair and effective alternative to rising tides. This is a book for students, researchers and for anyone with the feeling that business as usual is no longer an option. Andrew Dobson, University of Keele, UK Global climate change raises important questions of international and intergenerational justice. In this important new book the author places research on the origins and impacts of climate change within the broader context of distributive justice and sustainable development. He argues that a range of theories of distribution notably those grounded in ideals of equality, priority and sufficiency converge on the adoption of the ambitious global climate policy framework known as Contraction and Convergence . Climate Change, Justice and Future Generations will be of great interest to academics and students specialising in environmental ethics, politics and environmental sustainability. It will also be of general interest to those concerned with climate change and the environment.