Advanced Search
MyIDEAS: Login to save this paper or follow this series

Climate Policy under Sustainable Discounted Utilitarianism

Contents:

Author Info

  • Simon Dietz
  • Geir B. Asheim

Abstract

Empirical evaluation of policies to mitigate climate change has been largely confined to the application of discounted utilitarianism (DU). DU is controversial, both due to the conditions through which it is justified and due to its consequences for climate policies, where the discounting of future utility gains from present abatement efforts makes it harder for such measures to justify their present costs. In this paper, we propose sustainable discounted utilitarianism (SDU) as an alternative principle for evaluation of climate policy. Unlike undiscounted utilitarianism, which always assigns zero relative weight to present utility, SDU is an axiomatically based criterion, which departs from DU by assigning zero weight to present utility if and only if the present is better off than the future. Using the DICE integrated assessment model to run risk analysis, we show that it is possible for the future to be worse off than the present along a ‘business as usual’ development path. Consequently SDU and DU differ, and willingness to pay for emissions reductions is (sometimes significantly) higher under SDU than under DU. Under SDU, stringent schedules of emissions reductions increase social welfare, even for a relatively high utility discount rate.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-08/cesifo1_wp3563.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3563.

as in new window
Length:
Date of creation: 2011
Date of revision:
Handle: RePEc:ces:ceswps:_3563

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: climate change; discounted utilitarianism; intergenerational equity; sustainable development; sustainable discounted utilitarianism;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. David Anthoff & Richard Tol, 2009. "The Impact of Climate Change on the Balanced Growth Equivalent: An Application of FUND," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 43(3), pages 351-367, July.
  2. Blackorby,Charles & Bossert,Walter & Donaldson,David J., 2005. "Population Issues in Social Choice Theory, Welfare Economics, and Ethics," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521532587.
  3. Weitzman, Martin L., 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," Scholarly Articles 3693423, Harvard University Department of Economics.
  4. Martin L. Weitzman, 2010. "What Is The "Damages Function" For Global Warming — And What Difference Might It Make?," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 57-69.
  5. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer, Springer, vol. 13(2), pages 231-257, April.
  6. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(407), pages 920-37, July.
  7. Samuel Fankhauser & Richard S.J. Tol, 2001. "On Climate Change And Economic Growth," Working Papers, Research unit Sustainability and Global Change, Hamburg University FNU-10, Research unit Sustainability and Global Change, Hamburg University, revised Jun 2002.
  8. Asheim, Geir B. & Mitra, Tapan & Tungodden, Bertil, 2006. "Sustainable recursive social welfare functions," Memorandum, Oslo University, Department of Economics 18/2006, Oslo University, Department of Economics.
  9. Geir B. Asheim, 2010. "Intergenerational Equity," Annual Review of Economics, Annual Reviews, Annual Reviews, vol. 2(1), pages 197-222, 09.
  10. Blackorby, Charles & Bossert, Walter & Donaldson, David, 1995. "Intertemporal Population Ethics: Critical-Level Utilitarian Principles," Econometrica, Econometric Society, Econometric Society, vol. 63(6), pages 1303-20, November.
  11. Asheim, Geir B. & Mitra, Tapan, 2010. "Sustainability and discounted utilitarianism in models of economic growth," Mathematical Social Sciences, Elsevier, Elsevier, vol. 59(2), pages 148-169, March.
  12. Marc Fleurbaey, 2007. "Assessing Risky Social Situations," IDEP Working Papers, Institut d'economie publique (IDEP), Marseille, France 0703, Institut d'economie publique (IDEP), Marseille, France, revised Jan 2007.
  13. Kelly, David L. & Kolstad, Charles D., 1999. "Malthus and Climate Change: Betting on a Stable Population," University of California at Santa Barbara, Economics Working Paper Series qt9ks625sk, Department of Economics, UC Santa Barbara.
  14. Ackerman, Frank & Stanton, Elizabeth A. & Bueno, Ramón, 2010. "Fat tails, exponents, extreme uncertainty: Simulating catastrophe in DICE," Ecological Economics, Elsevier, Elsevier, vol. 69(8), pages 1657-1665, June.
  15. Mirrlees, J. A. & Stern, N. H., 1972. "Fairly good plans," Journal of Economic Theory, Elsevier, Elsevier, vol. 4(2), pages 268-288, April.
  16. Antoine Bommier & Stéphane Zuber, 2008. "Can preferences for catastrophe avoidance reconcile social discounting with intergenerational equity?," Social Choice and Welfare, Springer, Springer, vol. 31(3), pages 415-434, October.
  17. ZUBER, Stéphane, 2010. "Justifying social discounting: the rank-discounted utilitarian approach," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2010036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  18. Dasgupta, Partha, 2001. "Human Well-Being and the Natural Environment," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199247882, October.
  19. Hammond, Peter J, 1989. "Consistent Plans, Consequentialism, and Expected Utility," Econometrica, Econometric Society, Econometric Society, vol. 57(6), pages 1445-49, November.
  20. M. L. Weitzman, 1974. "On the Welfare Significance of National Product in Dynamic Economy," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 125, Massachusetts Institute of Technology (MIT), Department of Economics.
Full references (including those not matched with items on IDEAS)

Citations

RePEc Biblio mentions

As found on the RePEc Biblio, the curated bibliography for Economics:
  1. > Environmental and Natural Resource Economics > Climate economics > Discounting, equity, uncertainty
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Lee H. Endress & Sittidaj Pongkijvorasin & James Roumasset & Christopher Wada, 2013. "Intergenerational Equity with Individual Impatience in an OLG Model of Optimal and Sustainable Growth," Working Papers, University of Hawaii Economic Research Organization, University of Hawaii at Manoa 2013-9, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
  2. John C. V. Pezzey & Paul J. Burke, 2014. "Towards a More Inclusive and Precautionary Indicator of Global Sustainability," CCEP Working Papers, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University 1410, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  3. Tol, Richard S.J., 2013. "Targets for global climate policy: An overview," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 37(5), pages 911-928.
  4. Fabien Prieur & Mabel Tidball & Cees A. Withagen, 2011. "Optimal Emission-Extraction Policy in a World of Scarcity and Irreversibility," CESifo Working Paper Series 3512, CESifo Group Munich.
  5. Nicholas Stern, 2013. "The Structure of Economic Modeling of the Potential Impacts of Climate Change: Grafting Gross Underestimation of Risk onto Already Narrow Science Models," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 838-59, September.
  6. Michael Spackman, 2011. "Government discounting controversies: the valuation of social time preference," Grantham Research Institute on Climate Change and the Environment Working Papers, Grantham Research Institute on Climate Change and the Environment 68, Grantham Research Institute on Climate Change and the Environment.
  7. Balvers, Ronald & Du, Ding & Zhao, Xiaobing, 2012. "The Adverse Impact of Gradual Temperature Change on Capital Investment," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington, Agricultural and Applied Economics Association 124676, Agricultural and Applied Economics Association.
  8. Simon Dietz & Anca N. Matei, 2013. "Is there space for agreement on climate change? A non-parametric approach to policy evaluation," Grantham Research Institute on Climate Change and the Environment Working Papers, Grantham Research Institute on Climate Change and the Environment 136, Grantham Research Institute on Climate Change and the Environment.
  9. Endress, Lee H. & Pongkijvorasin, Sittidaj & Roumasset, James & Wada, Christopher A., 2014. "Intergenerational equity with individual impatience in a model of optimal and sustainable growth," Resource and Energy Economics, Elsevier, Elsevier, vol. 36(2), pages 620-635.
  10. Wouter Botzen, W.J. & van den Bergh, Jeroen C.J.M., 2012. "How sensitive is Nordhaus to Weitzman? Climate policy in DICE with an alternative damage function," Economics Letters, Elsevier, Elsevier, vol. 117(1), pages 372-374.
  11. Adler, Matthew & Treich, Nicolas, 2014. "Consumption, Risk and Prioritarianism," TSE Working Papers, Toulouse School of Economics (TSE) 14-500, Toulouse School of Economics (TSE).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3563. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.