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A dynamic analysis of human welfare in a warming planet

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  • Humberto Llavador

    ()

  • John E. Roemer
  • Joaquim Silvestre

Abstract

Climate science indicates that climate stabilization requires low GHG emissions. Is this consistent with nondecreasing human welfare? Our welfare or utility index emphasizes education, knowledge, and the environment. We construct and calibrate a multigenerational model with intertemporal links provided by education, physical capital, knowledge and the environment. We reject discounted utilitarianism and adopt, first, the Pure Sustainability Optimization (or Intergenerational Maximin) criterion, and, second, the Sustainable Growth Optimization criterion, that maximizes the utility of the first generation subject to a given future rate of growth. We apply these criteria to our calibrated model via a novel algorithm inspired by the turnpike property. The computed paths yield levels of utility higher than the level at reference year 2000 for all generations. They require the doubling of the fraction of labor resources devoted to the creation of knowledge relative to the reference level, whereas the fractions of labor allocated to consumption and leisure are similar to the reference ones. On the other hand, higher growth rates require substantial increases in the fraction of labor devoted to education, together with moderate increases in the fractions of labor devoted to knowledge and the investment in physical capital.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1110.

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Date of creation: Sep 2008
Date of revision: Feb 2010
Handle: RePEc:upf:upfgen:1110

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Web page: http://www.econ.upf.edu/

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Keywords: Climate change; education; Maximin; growth.;

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  10. Joaquim Silvestre & Joaquim Silvestre & John E. Roemer & Joaquim Silvestre, 2009. "“Intergenerational justice when future worlds are uncertain”," Working Papers 94, University of California, Davis, Department of Economics.
  11. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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  13. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  14. John Roemer, 2011. "The Ethics of Intertemporal Distribution in a Warming Planet," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(3), pages 363-390, March.
  15. Gerlagh, Reyer & van der Zwaan, B. C. C., 2002. "Long-Term Substitutability between Environmental and Man-Made Goods," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 329-345, September.
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Citations

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Cited by:
  1. Rozenberg, Julie & Vogt-Schilb, Adrien & Hallegatte, Stephane, 2013. "How capital-based instruments facilitate the transition toward a low-carbon economy : a tradeoff between optimality and acceptability," Policy Research Working Paper Series 6609, The World Bank.
  2. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2009. "Intergenerational justice when future worlds are uncertain," Economics Working Papers 1178, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2010.
  3. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2013. "North-South Convergence and the Allocation of CO2 Emissions," Cowles Foundation Discussion Papers 1932, Cowles Foundation for Research in Economics, Yale University.
  4. Michele Lombardi & Roberto Veneziani, 2009. "Liberal Egalitarianism and the Harm Principle," Global COE Hi-Stat Discussion Paper Series gd09-078, Institute of Economic Research, Hitotsubashi University.
  5. Andreas Peichl & Nico Pestel, 2013. "Multidimensional Well‐Being at the Top: Evidence for Germany," Fiscal Studies, Institute for Fiscal Studies, vol. 34, pages 355-371, 09.
  6. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2012. "Should we sustain? And if so, sustain what? Consumption or the quality of life?," Working Papers 1222, University of California, Davis, Department of Economics.
  7. John Roemer, 2011. "The Ethics of Intertemporal Distribution in a Warming Planet," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(3), pages 363-390, March.
  8. Robert D. Cairns & Vincent Martinet, 2013. "An Environmental-Economic Measure of Sustainable Development," CESifo Working Paper Series 4327, CESifo Group Munich.
  9. Dieckhoener, Caroline & Hecking, Harald, 2012. "Greenhouse Gas Abatement Cost Curves of the Residential Heating Market – a Microeconomic Approach," EWI Working Papers 2012-16, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  10. John Roemer, 2013. "Once More on Intergenerational Discounting in Climate-Change Analysis: Reply to Partha Dasgupta," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(1), pages 141-148, September.

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