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Damages to the Future Poor and
Carbon Prices
Francis Dennig, Mark Budolfson,
Marc Fleurbaey, Asher Siebert, Robert Socolow...
Introducing quintiles
β€’ In RICE,
𝑖,𝑑
1
1 + 𝜌
𝑑
𝐿𝑖𝑑
𝑐𝑖𝑑
1βˆ’πœ‚
1 βˆ’ πœ‚
β€’ Stern takes πœ‚ = 1, Nordhaus takes πœ‚ = 2
β€’ We retain 𝜌=0...
NICE: Nested Inequalities
(generations, regions, quintiles)
β€’ We assume that the current distribution will
remain fixed be...
Business-as-usual
Carbon tax
An objection
β€’ Do mitigation for the poor? Why not
redistribute?
β€’ Is this objection politically credible? How
much redist...
𝜏 = 65%
Conclusion
β€’ Inequality in the distribution of damage matters
as much as the difference in ethical parameters
between Nord...
What next?
β€’ Wed session (poster): interaction between
discount rate, inequality aversion, distribution
of damages and cat...
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Damages to the Future Poor and Carbon Prices, Mark Budolfson, Francis Dennig, Marc Fleurbaey, Asher Siebert, Robert Socolow

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Marc Fleurbaey, Princeton, at the Our Common Future Under Climate Change conference, July 7-10 in Paris, France.

More at http://www.commonfuture-paris2015.org/

Published in: Science
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Damages to the Future Poor and Carbon Prices, Mark Budolfson, Francis Dennig, Marc Fleurbaey, Asher Siebert, Robert Socolow

  1. 1. Damages to the Future Poor and Carbon Prices Francis Dennig, Mark Budolfson, Marc Fleurbaey, Asher Siebert, Robert Socolow (Princeton)
  2. 2. Introducing quintiles β€’ In RICE, 𝑖,𝑑 1 1 + 𝜌 𝑑 𝐿𝑖𝑑 𝑐𝑖𝑑 1βˆ’πœ‚ 1 βˆ’ πœ‚ β€’ Stern takes πœ‚ = 1, Nordhaus takes πœ‚ = 2 β€’ We retain 𝜌=0.015, πœ‚ = 2 β€’ In our variant, 𝑖,𝑗,𝑑 1 1 + 𝜌 𝑑 𝐿𝑖𝑗𝑑 𝑐𝑖𝑗𝑑 1βˆ’πœ‚ 1 βˆ’ πœ‚
  3. 3. NICE: Nested Inequalities (generations, regions, quintiles) β€’ We assume that the current distribution will remain fixed before damages β€’ We consider that the damages are proportional to π‘žπ‘–π‘—π‘‘ πœ‰ where π‘žπ‘–π‘—π‘‘ are quintile shares β€’ πœ‰ = 1, 0, or + 1
  4. 4. Business-as-usual
  5. 5. Carbon tax
  6. 6. An objection β€’ Do mitigation for the poor? Why not redistribute? β€’ Is this objection politically credible? How much redistribution is needed to make mitigation less of a priority? β€’ We introduce a revenue-neutral flat tax: 𝑐𝑖𝑗𝑑 = 𝑏 + 1 βˆ’ 𝜏 𝑐𝑖𝑗𝑑 with no disincentive effect β€’ And then try international aid (insufficient!)
  7. 7. 𝜏 = 65%
  8. 8. Conclusion β€’ Inequality in the distribution of damage matters as much as the difference in ethical parameters between Nordhaus and Stern β€’ Inequality aversion pushes for more or less mitigation depending on the distribution of damages (the poorest are either now or in the future) β€’ Protecting the poor by redistribution would require a lot of redistribution to mimic the protection obtained through mitigation
  9. 9. What next? β€’ Wed session (poster): interaction between discount rate, inequality aversion, distribution of damages and catastrophic risks β€’ What about the distribution of costs? β€’ Predict distribution of income? Piketty versus Kuznets β€’ Role of population assumptions? β€’ Risk

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