Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7344617 | Ecological Economics | 2018 | 16 Pages |
Abstract
We explore how the intertemporal distribution of well-being affects the social cost of carbon. In contrast to the literature that studies parameters of a particular social welfare function, such as the discount rate, we shift the focus and directly assume a parametric form for the intertemporal distribution of well-being. This has the advantage of avoiding explicit discounting choices, which has initiated much debate. Specifically, we consider a set of intertemporal distributions that reach a steady-state at a pre-specified level of “sufficient” well-being, or equivalently after a pre-specified “end-of-growth horizon”. We numerically illustrate our results in DICE and find that the social cost of carbon increases over-proportionally with the sufficiency level of well-being. While the social cost of carbon in 2015 is US$Â 7 if the sufficiency level is four-fold the present level, it is US$Â 30 if the sufficiency level is 15-fold, and US$Â 100 if the sufficiency level is 26-fold the present level. This shows in a transparent way how conceptions of intergenerational distributive justice drive the social cost of carbon.
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Authors
Martin C. Hänsel, Martin F. Quaas,