Priority for the Worse Off and the Social Cost of Carbon

Authors

Matthew D. Adler, Duke Law SchoolFollow
David Anthoff
Valentina Bosetti
Greg Garner
Klaus Keller
Nicolas Treich

Document Type

Working Paper

Publication Date

2016

Keywords

social cost of carbon, climate change, prioritarianism, integrated assessment model, welfare economics.

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.

Citation

Matthew Adler et al., Priority for the Worse Off and the Social Cost of Carbon (CSIFO, Working Paper No. 6032, August 2016)