FEEM working papers "Note di lavoro"
2016.055
Date: 5/8/2016

Priority for the Worse Off and the Social Cost of Carbon


Authors:

Matthew Adler (Duke University School of Law); David Anthoff (Energy and Resources Group - University of California); Valentina Bosetti (Bocconi University); Greg Garner (The Pennsylvania State University); Klaus Keller (The Pennsylvania State University, Carnegie Mellon University); Nicolas Treich (INRA - University of Toulouse)

JEL n.: Q54, I30
Keywords: Prioritarianism, Social Welfare Function, Social Cost of Carbon

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.

***

Suggested citation: Adler, M., D. Anthoff, V. Bosetti, G. Garner, K. Keller, N. Treich, (2016), 'Priority for the Worse Off and the Social Cost of Carbon', Nota di Lavoro 55.2016, Milan, Italy: Fondazione Eni Enrico Mattei

Download file
Download PDF file

FEEM Newsletter & Update

Subscribe to stay connected.

Your personal data will be processed by Fondazione Eni Enrico Mattei. – data Controller – with the aim of emailing the FEEM newsletter & Update. The use of Your email address is necessary for the implementation of the newsletter service. You are invited to read the Privacy Policy in order to obtain additional information about the protection of Your rights.

This Website uses technical cookies and cookie analytics, as well as “third party” profiling cookies.
If you close this banner or you decide to continue navigating on this Website, you express consent to the use of cookies. If you need additional information or you wish to express selective choices on the use of cookies, please refer to the   Cookie PolicyI agree