Valuing Deaths Caused by Climate Change

Valuing deaths caused by climate change is complex, controversial, and of first-order consequence for the social cost of carbon (SCC): the metric used to account for climate impacts in Benefit Cost Analysis (BCA). Yet the underlying considerations remain under-analyzed. We assess three BCA approaches with support in the literature and practice when applied to global externalities like climate change: (1) Kaldor-Hicks, (2) Current U.S. Practice, and (3) Welfare-Weighted. All approaches share descriptive inputs including value of statistical life—the willingness to pay to avoid elevated mortality risk—but differ in their procedure for aggregating benefits and costs across winners and losers, a normative choice that must encode value judgements. (1) values richer statistical lives more than poorer lives, (2) values lives equally, and (3) values lives nearly or exactly equally depending on parameter values. We find that the rationale for (1) is weaker for global externalities than domestic ones. Because compensation to losers is less likely globally, (1) reduces to a social welfare function with Negishi weights that undo diminishing marginal utility. Furthermore, when climate costs are measured in purchasing-power-parity-adjusted money—as is typical for the SCC—(1) no longer satisfies its own potential compensation criterion. Arguments for (2) and (3) are comparatively stronger for global externalities than domestic ones, and we establish conditions under which they converge. Given these complexities, we emphasize the importance of reporting the mortality impacts implicit in the SCC in natural physical units before monetizing and aggregating, so that normative assumptions are explicit and transparent, as is standard for other impact categories in BCA. This physical-unit metric implicit in every SCC value is the mortality cost of carbon (MCC): the number of deaths per pulse of emissions.