Sacrifice, discounting and climate policy: five questions
AbstractI provide a selective review of discounting and climate policy. After reviewing evidence on the importance of the discount rate in setting policy, I ask whether standard models tend to exaggerate the sacrifices that the current generation needs to undertake in order to internalize climate damages. I then consider whether the risk of catastrophic damage really overwhelms discounting, in the determination of optimal policy. I revisit the question of how we actually think about the distant future.
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Bibliographic InfoPaper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt1zq431s8.
Date of creation: 12 Jun 2009
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climate change; discounting; intergenerational conflict; catastrophic risk; hyperbolic discounting; Life Sciences;
Other versions of this item:
- Larry S. Karp, 2009. "Sacrifice, Discounting and Climate Policy: Five Questions," CESifo Working Paper Series 2761, CESifo Group Munich.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D99 - Microeconomics - - Intertemporal Choice - - - Other
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
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