The document questions the use of a social discount rate in the Stern Review on climate change. While a low discount rate leads to an alarmist conclusion about climate costs, discounting does not properly address the intergenerational aspect of climate change. Instead, climate change poses a moral question about how current generations should act for the future. Various moral theories have shortcomings in the intergenerational context as well, highlighting issues around distribution, cooperation, rights, and harm between generations. When making climate policy decisions, both efficiency and these moral issues need consideration.

1. Abstract
The Stern Review on the Economics of Climate Change produced for the British Government urges
strong early action to avoid the costs of climate change. This conclusion is predominantly an artefact of
a low social discount rate – using a higher social discount rate would produce a less alarmist conclusion.
However, I question the appropriateness of using a social discount rate at all in this context. Discounting
is a concept to guide how an agent allocates resources across time to maximise their own utility from
consumption – it does not sufficiently capture the intergenerational aspect of the climate change problem.
Rather than a problem of optimal intertemporal resource allocation, climate change poses the moral
question of how we should act towards a different group of people living in the future – efficiency can
only form part of the answer. A climate policy decision-maker may seek guidance from several moral
theories but these moral theories have shortcomings in the intergenerational context. Utilitarian and
Rawlsian moral theories highlight the distributive and cooperation issues between generations. Rights-
based moral theories are problematic because of the non-existence of future people and the Non-Identity
Problem. The Non-Identity Problem creates difficulty in judging actions as morally wrong as regards
harming people. An alternative threshold understanding of harm is discussed as a possible solution to this
problem. A decision-maker must be aware of the above moral issues as well as considering efficiency
when making a choice on climate policy.
Acknowledgements
I would like to thank my supervisor, Professor Wilfred Beckerman, for his guidance and patience. I am
also grateful to valuable comments of Daniel Hogg on earlier drafts. I take responsibility for any remaining
errors or omissions.