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Priority for the worse-off and the social cost of carbon

Author

Listed:
  • Matthew Adler

    (Duke University School of Law)

  • David Anthoff

    (Energy and Resources Group, University of California)

  • Valentina Bosetti

    (Bocconi University, and FEEM)

  • Greg Garner

    (Earth and Environmental Systems Institute, The Pennsylvania State University, University Park
    Present address: Woodrow Wilson School, Princeton University, Princeton, New Jersey 08544, USA.)

  • Klaus Keller

    (Earth and Environmental Systems Institute, The Pennsylvania State University, University Park
    The Pennsylvania State University, University Park
    Carnegie Mellon University)

  • Nicolas Treich

    (Toulouse School of Economics, INRA, University of Toulouse Capitole)

Abstract

The social cost of carbon (SCC) is a key tool in climate policy. The SCC expresses in monetary terms the social impact of the emission of a ton of CO2 in a given year. The SCC is calculated using a ‘social welfare function’ (SWF): a method for assessing social welfare. The dominant SWF in climate policy is the discounted-utilitarian SWF. Individuals’ well-being numbers (utilities) are summed, and the values for later generations are reduced (‘discounted’). This SWF has been criticized for ignoring the distribution of well-being and including an arbitrary time preference. Here, we use a ‘prioritarian’ SWF, with no time discount, to calculate the SCC. This SWF gives extra weight (‘priority’) to worse-off individuals. Prioritarianism is a well-developed concept in ethics and welfare economics, but has been rarely used in climate scholarship. We find substantial differences between the discounted-utilitarian and non-discounted prioritarian SCCs.

Suggested Citation

  • Matthew Adler & David Anthoff & Valentina Bosetti & Greg Garner & Klaus Keller & Nicolas Treich, 2017. "Priority for the worse-off and the social cost of carbon," Nature Climate Change, Nature, vol. 7(6), pages 443-449, June.
    • Handle: RePEc:nat:natcli:v:7:y:2017:i:6:d:10.1038_nclimate3298
    DOI: 10.1038/nclimate3298
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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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