Weight Factors in Cost-Benefit Analysis of Climate Change
Equity considerations may justify the use of weight factors when estimating the costs of climate change. This paper reviews different weight factors that have been used in the climate economics literature. Based on a simple model, it is shown that although the different weight factors imply substantially different cost-damage estimates, they actually yield the same optimal emission reductions. This paradox is explained by the fact that some of the approaches require that also the abatement costs are weighted – and this offsets the effect of the diverging cost-damage estimates. The model is then used to analyse the importance weighting may have on the overall cost-benefit analysis. At present, when most of the global emissions of (fossil) CO2 originate from the industrialised countries, the global optimal emissions are considerably lower if costs are weighted. However, the more the emissions in developing countries grow, the less important becomes the introduction of weight factors in cost-benefit analysis of climate change for the global emission reductions, in the model developed here. On a regional level, the introduction of weight factors continues to play an important role, implying substantially lower emissions in the rich region and slightly higher (!) in the poor. Copyright Kluwer Academic Publishers 1999
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 13 (1999)
Issue (Month): 3 (April)
|Contact details of provider:|| Web page: http://www.springer.com|
Postal:c/o EAERE Secretariat - Fondazione Eni Enrico Mattei - Isola di San Giorgio Maggiore 8, I-30124 Venice, Italy
Web page: http://www.eaere.org/
More information through EDIRC
|Order Information:||Web: http://www.springer.com/economics/environmental/journal/10640/PS2|
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.:
- Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-937, July.
- Azar, Christian & Sterner, Thomas, 1996. "Discounting and distributional considerations in the context of global warming," Ecological Economics, Elsevier, vol. 19(2), pages 169-184, November.
- William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, November.
- Samuel Fankhauser & Richard Tol & DAVID Pearce, 1997. "The Aggregation of Climate Change Damages: a Welfare Theoretic Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(3), pages 249-266, October.
- Spash, Clive L., 1994. "Double CO2 and beyond: benefits, costs and compensation," Ecological Economics, Elsevier, vol. 10(1), pages 27-36, May.
- Plambeck, Erica L & Hope, Chris, 1996. "PAGE95 : An updated valuation of the impacts of global warming," Energy Policy, Elsevier, vol. 24(9), pages 783-793, September.
- Robert Ayres & Jörg Walter, 1991. "The greenhouse effect: Damages, costs and abatement," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 1(3), pages 237-270, September.
- Bingham, Gail & Bishop, Richard & Brody, Michael & Bromley, Daniel & Clark, Edwin (Toby) & Cooper, William & Costanza, Robert & Hale, Thomas & Hayden, Gregory & Kellert, Stephen, 1995. "Issues in ecosystem valuation: improving information for decision making," Ecological Economics, Elsevier, vol. 14(2), pages 73-90, August.
- Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, July.
When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:13:y:1999:i:3:p:249-268. 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: (Sonal Shukla)or (Rebekah McClure)
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.