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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)

  • Greg Garner

    (The Pennsylvania State University)

  • Klaus Keller

    (The Pennsylvania State University and Carnegie Mellon University)

  • Nicolas Treich

    (INRA, University of Toulouse)

Abstract

The social cost of carbon (SCC) is a monetary measure of the harms from carbon emission. Specifically, it is the reduction in current consumption that produces a loss in social welfare equivalent to that caused by the emission of a ton of CO2. The standard approach is to calculate the SCC using a discounted-utilitarian social welfare function (SWF)—one that simply adds up the well-being numbers (utilities) of individuals, as discounted by a weighting factor that decreases with time. The discounted-utilitarian SWF has been criticized both for ignoring the distribution of well-being, and for including an arbitrary preference for earlier generations. Here, we use a prioritarian SWF, with no time-discount factor, to calculate the SCC in the integrated assessment model RICE. Prioritarianism is a well-developed concept in ethics and theoretical welfare economics, but has been, thus far, little used in climate scholarship. The core idea is to give greater weight to well-being changes affecting worse off individuals. We find substantial differences between the discounted-utilitarian and non-discounted prioritarian SCC.

Suggested Citation

  • Matthew Adler & David Anthoff & Valentina Bosetti & Greg Garner & Klaus Keller & Nicolas Treich, 2016. "Priority for the Worse Off and the Social Cost of Carbon," Working Papers 2016.55, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2016.55
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    More about this item

    Keywords

    Prioritarianism; Social Welfare Function; Social Cost of Carbon;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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