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A dynamic analysis of human welfare in a warming planet

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  • Humberto Llavador

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  • 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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References

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  8. Llavador, Humberto & Roemer, John E. & Silvestre, Joaquim, 2010. "Intergenerational justice when future worlds are uncertain," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 728-761, September.
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  12. John Roemer, 2011. "The Ethics of Intertemporal Distribution in a Warming Planet," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 48(3), pages 363-390, March.
  13. Salvador Ortigueira, 2000. "A dynamic analysis of an endogenous growth model with leisure," Economic Theory, Springer, Springer, vol. 16(1), pages 43-62.
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  18. John E. Roemer, 2005. "Intergenerational Justice and Sustainability under the Leximin Ethic," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1512, Cowles Foundation for Research in Economics, Yale University.
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Citations

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Cited by:
  1. Joaquim Silvestre & Joaquim Silvestre & John E. Roemer & Joaquim Silvestre, 2009. "“Intergenerational justice when future worlds are uncertain”," Working Papers, University of California, Davis, Department of Economics 94, University of California, Davis, Department of Economics.
  2. Michele Lombardi & Kahame Miyagishima & Roberto Veneziani, 2013. "Liberal Egalitarianism and the Harm Principle," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2013-07, University of Massachusetts Amherst, Department of Economics.
  3. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2010. "North-South Convergence and the Allocation of CO2 Emissions," Working Papers 493, Barcelona Graduate School of Economics.
  4. 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.
  5. Andreas Peichl & Nico Pestel, 2011. "Multidimensional Well-Being at the Top: Evidence for Germany," SOEPpapers on Multidisciplinary Panel Data Research 425, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. 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, European Association of Environmental and Resource Economists, vol. 56(1), pages 141-148, September.
  7. W. Botzen & Jeroen Bergh, 2014. "Specifications of Social Welfare in Economic Studies of Climate Policy: Overview of Criteria and Related Policy Insights," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 58(1), pages 1-33, May.
  8. Dieckhoener, Caroline & Hecking, Harald, 2012. "Greenhouse Gas Abatement Cost Curves of the Residential Heating Market – a Microeconomic Approach," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2012-16, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  9. Robert D. Cairns & Vincent Martinet, 2013. "An Environmental-Economic Measure of Sustainable Development," CESifo Working Paper Series 4327, CESifo Group Munich.
  10. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2012. "Should we sustain? And if so, sustain what? Consumption or the quality of life?," Working Papers, University of California, Davis, Department of Economics 1222, University of California, Davis, Department of Economics.
  11. John Roemer, 2011. "The Ethics of Intertemporal Distribution in a Warming Planet," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 48(3), pages 363-390, March.
  12. Giménez Gómez, José M. (José Manuel) & Teixidó Figueras, Jordi Josep & Vilella Bach, Misericòrdia, 2014. "The global carbon budget:a conflicting claims problem," Working Papers 2072/237597, Universitat Rovira i Virgili, Department of Economics.

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