This paper discusses the limitations, omissions and value judgements of the application of conventional economic analysis in the evaluation of climate change mitigation policies. It is argued that these have biased the result of the assessment models towards the recommendation of less aggressive mitigation strategies. Consequently, this paper questions whether they provide appropriate policy recommendations. The unequal distribution of rights implicitly assumed in conventional economic analyses applied to climate change is questioned and an alternative approach considering a distribution of rights (...) consistent with sustainable development is put forward. Finally, the points that an analysis consistent with sustainable development should take into account are presented. (shrink)

Intergenerational impartiality requires putting the welfare of future generations at par with that of our own. However, rational choice requires weighting all welfare values by the respective probabilities of realization. As the risk of non-survival of mankind is strictly positive for all time periods and as the probability of non-survival is cumulative, the probability weights operate like discount factors, though justified on a morally justifiable and completely different ground. Impartial intertemporal welfare maximization is acceptable, though the welfare of people in (...) the very far future has lower effects as the probabilities of their existence are also lower. However, the effective discount rate on future welfare values justified on this ground is likely to be less than 0.1 per annum. Such discounting does not compromise environmental protection and sustainability unduly. The finiteness of our universe implies that the sum of our expected welfare to infinity remains finite, solving the paradox of having to compare different infinite values in optimal growth/conservation theories. (shrink)

This essay examines the issue of false assumptions in models via a case study of a prominent economic model of sustainable development, wherein the assumption of an infinite future plays a central role. Two proposals are found to be helpful for this case, one based on the concept of derivational robustness and the other on understanding. Both suggest that the assumption of an infinite future, while arguably legitimate in some applications of the model, is problematic with respect to what I (...) call “Parfitian” welfare functions. This result is relevant to debates about discounting the future in economics and environmental ethics. (shrink)

. Values in the cultural timescapes of science. Cultural Values: Vol. 2, No. 2-3, pp. 385-402.

Climate change presents us with a problem of intergenerational justice. While any costs associated with climate change mitigation measures will have to be borne by the world’s present generation, the main beneficiaries of mitigation measures will be future generations. This raises the question to what extent present generations have a responsibility to shoulder these costs. One influential approach for addressing this question is to appeal to neo-classical economic cost–benefit analyses and so-called economy-climate “integrated assessment models” to determine what course of (...) action a principle of intergenerational welfare maximization would require of us. I critically examine a range of problems for this approach. First, integrated assessment models face a problem of underdetermination and induction: They are very sensitive to a number of highly conjectural assumptions about economic responses to a temperature and climate regime, for which we have no empirical evidence. Second, they involve several simplifying assumptions which cannot be justified empirically. And third, some of the assumptions underlying the construction of economic models are intrinsically normative assumptions that reflect value judgments of the modeler. I conclude that, while integrated assessment models may play a useful role as “toy models,” their use as tools for policy optimization is highly problematic. (shrink)

Intergenerational impartiality requires putting the welfare of future generations at par with that of our own. However, rational choice requires weighting all welfare values by the respective probabilities of realization. As the risk of non-survival of mankind is strictly positive for all time periods and as the probability of non-survival is cumulative, the probability weights operate like discount factors, though justified on a morally justifiable and completely different ground. Impartial intertemporal welfare maximization is acceptable, though the welfare of people in (...) the very far future has lower effects as the probabilities of their existence are also lower. However, the effective discount rate on future welfare values (distinct from monetary values) justified on this ground is likely to be less than 0.1 per annum. Such discounting does not compromise environmental protection and sustainability unduly. The finiteness of our universe implies that the sum of our expected welfare to infinity remains finite, solving the paradox of having to compare different infinite values in optimal growth/conservation theories. (shrink)