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Arguments about the appropriate discount rate often start by assuming a Utilitarian social welfare function with isoelastic utility, in which the consumption discount rate is a function of the (constant) elasticity of marginal utility along with the (much discussed) utility discount rate. In...
Persistent link: https://www.econbiz.de/10010298644
Lemoine and Rudik (2017) argue that it is efficient to delay reducing carbon emissions, because there is substantial inertia in the climate system. However, this conclusion rests upon misunderstanding the relevant climate physics: there is no substantial lag between CO2 emissions and warming,...
Persistent link: https://www.econbiz.de/10012018105
Avoiding unmanageable climate change implies that global greenhouse gas emissions must be reduced rapidly. A significant body of literature shows that policy instruments such as carbon prices can make an important contribution to this goal. In contrast, changes in preferences or values are...
Persistent link: https://www.econbiz.de/10011957220
Putting a price on carbon is critical for climate change policy. Increasingly, policymakers combine multiple policy tools to achieve this, for example by complementing cap-and-trade schemes with a carbon tax, or with a feed-in tariff. Often, the motivation for doing so is to limit undesirable...
Persistent link: https://www.econbiz.de/10009440025
Conventional cost-benefit analysis incorporates the normally reasonable assumption that the policy or project under examination is marginal in the sense that it will not significantly change relative prices. In particular, it is assumed that the policy or project does not change the underlying...
Persistent link: https://www.econbiz.de/10009440031
Recent research suggests that the long term future should be discounted with a declining discount rate. One such line of research, exemplified by Weitzman [Gamma discounting, Amer. Econ. Rev. 91 (2001) 261–271], shows that the certainty equivalent discount rate is declining when future capital...
Persistent link: https://www.econbiz.de/10009440099
The introduction of mandatory controls and a trading scheme covering approximately half of all carbon dioxide emissions across Europe has triggered a debate about the impact of emissions trading on the competitiveness of European industry. Economic theory suggests that, in many sectors,...
Persistent link: https://www.econbiz.de/10009440100
This paper reviewed current discounting practice in the OECD. It found a wide variance in guidance across countries (which may or may not be justifiable by different economic conditions), and significant differences in guidance within countries. Furthermore, even when discounting guidance is...
Persistent link: https://www.econbiz.de/10009440154
Optimal control theory has been extensively used to determine the optimal harvesting policy for renewable resources such as fish stocks. In such optimisations, it is common to maximise the discounted utility of harvesting over time, employing a constant time discount rate. However, evidence from...
Persistent link: https://www.econbiz.de/10009440555
Putting a price on carbon is critical for climate change policy. Increasingly, policymakers combine multiple policy tools to achieve this, for example by complementing cap-and-trade schemes with a carbon tax, or with a feed-in tariff. Often, the motivation for doing so is to limit undesirable...
Persistent link: https://www.econbiz.de/10009440556