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Climate policies deserve a negative discount rate

Listed author(s):
  • Marc Fleurbaey

    ()

    (Economic Theory Center - Princeton University [Pinceton], Le Collège d'études mondiales/FMSH - Fondation Maison des sciences de l'homme)

  • Stéphane Zuber

    (Le Collège d\'études mondiales - CERSES - Centre de recherche sens, ethique, société - CNRS - Centre National de la Recherche Scientifique - UPD5 - Université Paris Descartes - Paris 5 - Le Collège d'études mondiales/FMSH - Fondation Maison des sciences de l'homme)

We defend a methodology of discounting, for the evaluation of the long-term effects of climate policies, which relies on a social welfare objective, against the view that the market rate of return should be used for that purpose. We also show that in the long run, the discount rate for such policies should focus on the worst-case scenario for the most disadvantaged populations. As a consequence, it is likely that the appropriate discount rate for climate policies should be negative, implying a high priority for the future.

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File URL: https://halshs.archives-ouvertes.fr/halshs-00728193/document
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Paper provided by HAL in its series Working Papers with number halshs-00728193.

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Date of creation: 10 Jul 2012
Handle: RePEc:hal:wpaper:halshs-00728193
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00728193
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  1. Marc Fleurbaey, 2007. "Assessing Risky Social Situations," IDEP Working Papers 0703, Institut d'economie publique (IDEP), Marseille, France, revised Jan 2007.
  2. Gollier, Christian, 2002. "Discounting an uncertain future," Journal of Public Economics, Elsevier, vol. 85(2), pages 149-166, August.
  3. Schelling, Thomas C, 1995. "Intergenerational discounting," Energy Policy, Elsevier, vol. 23(4-5), pages 395-401.
  4. Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November.
  5. Weitzman, Martin L., 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," Scholarly Articles 3693423, Harvard University Department of Economics.
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