On the Relation Between Discounting of Climate Change and Edgeworth-Pareto Substitutability

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

The Social Cost of Carbon on an Optimal Balanced Growth Path

“…Admittedly, the restrictions on technology and preferences that must be fulfilled for existence of an optimal balanced growth path are rather restrictive. However, I stressed already myself in Kögel (2009) that the common practice of using a constant social discount rate requires fulfillment of restrictive knife-edge conditions that cannot be taken for granted. Nevertheless, the 2°C world temperature increase target seems to suggest that policymakers aim for a balanced growth path as defined in this paper.…”

Intellectual bridges across project evaluation traditions: the contribution of EU Regional Policy

“…This is something the Green Book clearly put forward, by suggesting that, for costs and benefits accruing more than 30 years into the future, discount rates to be used ranges from 3.5% (in a 0-30 years horizon) to 3.0% (for 31-75 years horizon) until 1% (in case of 30 + years horizon) 17 . In the same vein, recent literature discusses the role of aversion to risk and to income inequality as determinants of the discount rate 18 when analysing climate change (see for example Atkinson et al, 2009). Interestingly, the authors find that individual preferences over these dimensions are weakly correlated in the context of climate change, with large heterogeneity over preferences.…”

“…4, European Commission, 2006). 16 Recent literature propose as an alternative method to adjust instead future environmental benefits for rising willingness to pay (the theoretical foundation for lower environmental discount rate) for environmental benefits and to discount those benefits at the consumption discount rate (see KÖGEL, T., 2009) 17 See the Green Book, Annex 6, pag. 99.…”

An Inquiry into Ethical Foundations of Cost Benefit Analysis

“…Recent literature on CBA of climate change recommends a "dual-rate discounting" where goods consumption is discounted with a consumption discount rate and environmental consumption is discounted with an environmental discount rate. It is expected that this would justify substantial emission reductions, as the environmental discount rate might be lower than the consumption discount rate, or that both discount rates might decline over time (Kögel, 2009).…”