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Determining the Proper Scope of Climate Change Policy Benefits in U.S. Regulatory Analyses: Domestic versus Global Approaches

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  • Ted Gayer
  • W. Kip Viscusi

Abstract

Although benefit assessment principles are well established for specific populations, very little attention has been paid to how to define the scope of the pertinent population for such assessments. Whose social welfare matters and whose benefits should be included in the assessment? Should there be any linkage between the benefits and the political jurisdiction of the citizens paying for the policy? In the case of U.S. regulatory policies, the norm has been to assess the benefits to U.S. citizens. However, in 2010, the Obama administration’s Interagency Working Group on Social Cost of Carbon adopted a global perspective on assessing the benefits associated with reductions in carbon dioxide emissions. This article examines whether U.S. policymakers should assess the benefits of climate change policies from a domestic or a global perspective. Drawing from executive orders and the laws governing risk and environmental regulations, we review the norms used for the scope of benefit assessments. Then we examine specific examples of the use of the global approach to benefit assessments of carbon dioxide reductions for energy efficiency regulations. We also compare the U.S. approach to that of other developed countries. Finally, we discuss how reciprocity should be incorporated into global benefits within a benefit–cost framework, and the role of altruism in considering the proper scope of benefits.

Suggested Citation

  • Ted Gayer & W. Kip Viscusi, 2016. "Determining the Proper Scope of Climate Change Policy Benefits in U.S. Regulatory Analyses: Domestic versus Global Approaches," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(2), pages 245-263.
  • Handle: RePEc:oup:renvpo:v:10:y:2016:i:2:p:245-263.
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    File URL: http://hdl.handle.net/10.1093/reep/rew002
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    References listed on IDEAS

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    1. Stephen Smith & Nils Axel Braathen, 2015. "Monetary Carbon Values in Policy Appraisal: An Overview of Current Practice and Key Issues," OECD Environment Working Papers 92, OECD Publishing.
    2. Scott Farrow & W. Kip Viscusi, 2013. "Towards principles and standards for the benefit–cost analysis of safety," Chapters,in: Principles and Standards for Benefit–Cost Analysis, chapter 5, pages 172-193 Edward Elgar Publishing.
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    Cited by:

    1. Ravago, Majah-Leah & Fabella, Raul & Alonzo, Ruperto & Danao, Rolando & Mapa, Dennis, 2016. "Filipino 2040 Energy: Power Security and Competitiveness," MPRA Paper 87721, University Library of Munich, Germany, revised Jan 2018.

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