THE COMPARATIVE IMPORTANCE FOR OPTIMAL CLIMATE POLICY OF TIME DISCOUNTING, INEQUALITY AVERSION, CATASTROPHES, AND THE REPRESENTATION OF INEQUALITIES

24th June 2016, 16:15 - 18:15

Quick Links:   Programme Overview  •  Parallel Session 6  •  Thematic session: Climate Impacts and Inequality

Session: Thematic session: Climate Impacts and Inequality
Chaired By: Francis Dennig, Yale-NUS College
Discussant(s): Johannes Emmerling, Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC)
When & Where: 24th June 2016, 16:15 - 18:15, Room D 5.2
Presented By: Francis Dennig, Yale-NUS College
Co-Author(s): Mark Budolfson, Princeton University, Marc Fleurbaey, Princeton University, Asher Siebert, Princeton University and Robert Socolow, Princeton University

Integrated assessment models (IAMs) provide estimates of the social cost of carbon (SCC) and inform policy. Researchers have identified a number of parameters within these models that each can have a significant effect on the SCC when varied within the range of current disagreement about their values. Here we investigate the interactions between some of these individually important factors – namely, time preference, inequality aversion, intraregional inequalities in the distribution of both damage and mitigation cost, and damage function. We show the comparative importance of these factors by displaying optimal carbon price trajectories that arise from the wide variety of combinations that are possible given the primary range of disagreement over each factor. This provides answers to a number of questions, including the relative importance of inequalities across space vs. time, and of inequalities vs. catastrophic impacts. For example, we evaluate Thomas Schelling’s conjecture that properly accounting for inequalities could lead the inequality aversion parameter to have an effect opposite to what is suggested by the Ramsey Equation. We show that this reversal does indeed happen but only when a set of conditions are all satisfied: roughly, when climate damages disproportionately harm the poor, and mitigation costs are not disproportionately paid by the poor.

Email a friend    

Recent Papers

You have recently viewed the following papers:

Online Programme Managed By WebMeets.com.