Intertemporal Evaluation Criteria for Climate Change Policy: The Basic Ethical Issues

25 Pages Posted: 15 May 2011

See all articles by Wolfgang Buchholz

Wolfgang Buchholz

Universitaet Regensburg; CESifo (Center for Economic Studies and Ifo Institute)

Michael Schymura

ZEW – Leibniz Centre for European Economic Research

Date Written: 2011

Abstract

The evaluation of long-term effects of climate change in cost-benefit analysis has a long tradition in environmental economics. Since the publication of the Stern Review in 2006 the debate about the "appropriate" discounting of future welfare and utility levels was revived and the most renowned scholars of the profession participated in this debate. But it seems that some contributions dealing with the Stern Review and the Review itself mixed up normative and positive issues to defend the own position. Furthermore, as we argue in this contribution, it also seems that the debate misses the heart of the problem. The aim of this work is to bring together economic and philosophical reasoning about justice and intergenerational equity in the context of climate change. So we adopt the normative view in order to present the most important ethical issues that, particularly in the context of climate policy, are most relevant for the choice of intertemporal welfare criteria. Subsequently we explore whether ethical considerations may also be helpful to determine the parameter values (or at least to delimit their range) which, after the choice of some type of intertemporal social welfare function, are needed to specify the concrete criterion that is employed to make decisions on climate policy.

Keywords: Intertemporal ethics, Distribution, Discounting, Climate Change

JEL Classification: Q53

Suggested Citation

Buchholz, Wolfgang and Schymura, Michael, Intertemporal Evaluation Criteria for Climate Change Policy: The Basic Ethical Issues (2011). ZEW - Centre for European Economic Research Discussion Paper No. 11-031, Available at SSRN: https://ssrn.com/abstract=1833395 or http://dx.doi.org/10.2139/ssrn.1833395

Wolfgang Buchholz

Universitaet Regensburg ( email )

D-93040 Regensburg, 93053
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Michael Schymura (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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