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Climate change: discount or not? future generations don't care that much

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  • Belgodere, Antoine

Abstract

This paper proposes a new way to model the cost of climate change, based on a vintage capital modeling. Climate change destroys capital, according to the difference between the current climate and the climate that prevailed when a given durable was built. This assumption is meant to account for the adaptation of economic agents to the changing climate. The main result is that the carbon tax is much less sensitive to the rate of time preference than in the Stern-Nordhaus controversy. Moreover, despite an estimate of the cost in line with Nordhaus' estimate for the 21st century, we find an optimal carbon tax much lower than his one.

Suggested Citation

  • Belgodere, Antoine, 2010. "Climate change: discount or not? future generations don't care that much," MPRA Paper 27358, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27358
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    File URL: https://mpra.ub.uni-muenchen.de/27358/1/MPRA_paper_27358.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    global warming; stock pollution; carbon tax; discount rate;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • 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
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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