Article
Priority for the worse-off and the social cost of carbon
Matthew Adler, David Anthoff, Valentina Bosetti, Greg Garner, Klaus Keller, and Nicolas Treich
May 2017, pp. 443–449
Reference
Matthew Adler, David Anthoff, Valentina Bosetti, Greg Garner, Klaus Keller, and Nicolas Treich, “Priority for the worse-off and the social cost of carbon”, Nature Climate Change, May 2017, pp. 443–449.
Abstract
The social cost of carbon (SCC) is a key tool in climate policy. The SCC expresses in monetary terms the social impact of the emission of a ton of CO2 in a given year. The SCC is calculated using a ‘social welfare function’ (SWF): a method for assessing social welfare. The dominant SWF in climate policy is the discounted-utilitarian SWF. Individuals’ well-being numbers (utilities) are summed, and the values for later generations are reduced (‘discounted’). This SWF has been criticized for ignoring the distribution of well-being and including an arbitrary time preference. Here, we use a ‘prioritarian’ SWF, with no time discount, to calculate the SCC. This SWF gives extra weight (‘priority’) to worse-off individuals. Prioritarianism is a well-developed concept in ethics and welfare economics, but has been rarely used in climate scholarship. We find substantial differences between the discounted-utilitarian and non-discounted prioritarian SCCs.
Research partnership
Amundi (centre sustainable)