Lewandowsky, Stephan, Freeman, Mark Charles orcid.org/0000-0003-4521-2720 and Mann, Michael (2017) Harnessing the uncertainty monster:Putting quantitative constraints on the intergenerational social discount rate. Global and Planetary Change. pp. 155-166. ISSN 0921-8181
Abstract
There is broad consensus among economists that unmitigated climate change will ultimately have adverse global economic consequences, that the costs of inaction will likely outweigh the cost of taking action, and that social planners should therefore put a price on carbon. However, there is considerable debate and uncertainty about the appropriate value of the social discount rate, that is the extent to which future damages should be discounted relative to mitigation costs incurred now. We briefly review the ethical issues surrounding the social discount rate and then report a simulation experiment that constrains the value of the discount rate by considering 4 sources of uncertainty and ambiguity: Scientific uncertainty about the extent of future warming, social uncertainty about future population and future economic development, political uncertainty about future mitigation trajectories, and ethical ambiguity about how much the welfare of future generations should be valued today. We compute a certainty-equivalent declining discount rate that accommodates all those sources of uncertainty and ambiguity. The forward (instantaneous) discount rate converges to a value near 0% by century's end and the spot (horizon) discount rate drops below 2% by 2100 and drops below previous estimates by 2070.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © Elsevier B. V. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > The York Management School |
Depositing User: | Pure (York) |
Date Deposited: | 28 Apr 2017 10:40 |
Last Modified: | 23 Jan 2025 00:10 |
Published Version: | https://doi.org/10.1016/j.gloplacha.2017.03.007 |
Status: | Published |
Refereed: | Yes |
Identification Number: | 10.1016/j.gloplacha.2017.03.007 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:115794 |