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The Social Cost of Global Warming and Sustainability Indicators: Lessons from an Application to France

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  • Jean-Marc Germain
  • Thomas Lellouch

Abstract

[eng] In order to meet the Paris agreements, significant financial resources must be incurred, which are evaluated here using a macroeconomic model combining a criterion of intergenerational distribution of the climate effort and assumptions on decarbonisation technologies. The results show that, for France, the current greenhouse gas emissions trajectory is unsustainable, in the sense that in order to reach the carbon neutrality commitment in 2050, the annual level of climate spending would have to increase very substantially, to 4.5% of GDP from the current 1.9%. These evaluations make it possible to deduce a social price of carbon or a value for climate action, which has been increased significantly compared to previous evaluations such as those of the Stiglitz-Stern commission, in line with the results of the Quinet Commission in 2019. Such evaluations of the emissions trajectory and the social price of carbon could be the entry point for environmental economic accounting that includes the degradation of natural assets caused by economic activities.

Suggested Citation

  • Jean-Marc Germain & Thomas Lellouch, 2020. "The Social Cost of Global Warming and Sustainability Indicators: Lessons from an Application to France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 517-518-5, pages 81-102.
    • Handle: RePEc:nse:ecosta:ecostat_2020_517t_6
    DOI: https://doi.org/10.24187/ecostat.2020.517t.2024
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    References listed on IDEAS

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    1. Easterlin, Richard A., 1974. "Does Economic Growth Improve the Human Lot? Some Empirical Evidence," MPRA Paper 111773, University Library of Munich, Germany.
    2. Nordhaus, William D, 1977. "Economic Growth and Climate: The Carbon Dioxide Problem," American Economic Review, American Economic Association, vol. 67(1), pages 341-346, February.
    3. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
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    Cited by:

    1. Didier Blanchet & Marc Fleurbaey, 2020. "Building Indicators for Inclusive Growth and its Sustainability: What Can the National Accounts Offer and How Can They Be Supplemented?," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 517-518-5, pages 9-24.

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    More about this item

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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