On the Uses of Benefit-Cost Reasoning in Choosing Policy Toward Global Climate Change
NBER Working Paper No. 5920
In the debate about the correct discount rate to use in evaluating policy with regard to climate change, which covers the entire world and extends for centuries, the conditions for deploying benefit-cost analysis are often overlooked. Where (a) income distributional effects of policies are large and (b) one cannot take for granted compensating adjustment in other policy instruments affecting distribution, simple aggregation of gains and losses is unlikely to provide a convincing basis for action, as an ethical matter, or predictor of policy, as a political matter.
Document Object Identifier (DOI): 10.3386/w5920
Published: Portney, Paul R. and John P. Weyant (eds.) Discounting and intergenerational equity. Washington, D.C.: Resources for the Future, 1999.
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