The comparative importance for optimal climate policy of discounting, inequalities and catastrophes

Mark Budolfson, Francis Dennig, Marc Fleurbaey, Asher Siebert, Robert H. Socolow

Research output: Contribution to journalArticle

5 Scopus citations

Abstract

Integrated assessment models (IAMs) of climate and the economy provide estimates of the social cost of carbon and inform climate policy. With the Nested Inequalities Climate Economy model (NICE) (Dennig et al. PNAS 112:15,827–15,832, 2015), which is based on Nordhaus’s Regional Integrated Model of Climate and the Economy (RICE), but also includes inequalities within regions, we investigate the comparative importance of several factors—namely, time preference, inequality aversion, intraregional inequalities in the distribution of both damage and mitigation cost and the damage function. We do so by computing optimal carbon price trajectories that arise from the wide variety of combinations that are possible given the prevailing range of disagreement over each factor. This provides answers to a number of questions, including 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.

Original languageEnglish (US)
Pages (from-to)481-494
Number of pages14
JournalClimatic Change
Volume145
Issue number3-4
DOIs
StatePublished - Dec 1 2017

All Science Journal Classification (ASJC) codes

  • Global and Planetary Change
  • Atmospheric Science

Fingerprint Dive into the research topics of 'The comparative importance for optimal climate policy of discounting, inequalities and catastrophes'. Together they form a unique fingerprint.

  • Cite this