Reflections on Climate Change, Economic Development, and Global Equity

Ethics and Climate Change ( …, 2008

There may never have been an instance of environmental pollution to challenge our powers of analysis and evaluation quite like climate change. Global in its causes and consequences, spanning many generations, and poorly understood but with the potential to transform the natural environment, climate change has highlighted challenging questions in the economics of risk, of distribution amongst individuals over space and time, and of different aspects of well-being. It is clear that these questions cannot be examined without also engaging with difficult ethical issues. It is not enough to simply presume that existing markets can provide a technocratic solution to questions of intergenerational justice. Indeed, by its very nature climate change demands that a number of ethical perspectives be considered, of which standard welfare economics is just one. Amartya Sen has made this point about the evaluation of economic development more generally. Furthermore, the 'workhorse' model of standard welfare economics has a particularly restrictive structure, even if we accept the ethical tenets of the general approach. Nevertheless, economics can provide valuable guidance on ethical issues by focusing on the consequences of policy and clarifying the implications of particular viewpoints on how to aggregate these consequences. But the relationship between economics and ethics cuts both ways: a careful, explicit examination of the relevant ethical issues can guide the formulation of economic questions on climate change and establish the meaning and relevance of the analysis. Here we would once again do well to heed Sen's advice.

The 'consequentialist' and 'welfarist' approach − the assessment of a policy in terms of its consequences for individual welfare − that is embodied in standard welfare economics is highly relevant to the ethics of climate change. In Section 2.3, we described the standard approach to ethics in welfare economics i.e. the evaluation of actions in terms of their consequences for consumption by individuals of goods and services. We emphasised that 'goods and services' in consumption were multi-dimensional and should be interpreted broadly. In this appendix we examine that approach in a little more detail and compare it with different ethical perspectives of relevance to the economics of climate change. For many applications of the standard theory, the community is defined as the nation-state and the decision-maker is interpreted as the government. Indeed this is often seen as sufficiently obvious as to go unstated. This is not, of course, intended to deny the complexities and pressures of political systems: the results of this approach should be seen as an ethical benchmark rather than a descriptive model of how political decisions are actually taken. Nevertheless, questions such as 'what do individuals value', 'what should be their relation to decisions and decision-making', 'what is the decision-making process' and 'who are the decision-makers' arise immediately and strongly in the ethical analysis of climate change. These questions take us immediately to different perspectives on ethics. Economics, together with the other social sciences, has in fact embraced a much broader perspective on the objectives of policy than that of standard welfare-economic analysis. Amartya Sen 1 , for example, has focused on the capabilities and freedoms of individuals to live a life they have reason to value, rather than narrowly on the bundles of goods and services they consume. His focus is on opportunities and the processes that create them, rather than on outcomes only. Similar emphases come from discussions of equity 2 (with its focus on opportunity), empowerment 3 , or social inclusion 4. While such perspectives are indeed different, in practice many of the indicators arising from them would overlap strongly with the areas of focus in the Millennium Development Goals (MDGs) and other indicators commonly used by international institutions. Indeed, the MDGs were the outcome of analyses and discussions which themselves embraced a range of ethical approaches. Impacts of climate change on future generations and other nations raise very firmly questions of rights. Protection from harm done by others lies at the heart of many philosophical approaches to liberty, freedom and justice. 5 Protection from harm is also expressed in many legal structures round the world in terms of legal responsibility for damage to the property or well-being of others. This is often applied whether or not the individual or firm was knowingly doing harm. A clear example is asbestos, whose use was not prohibited 6 when it was placed in buildings with the worthy purpose of protecting against the spread of fire. Nevertheless insurance companies are still today paying large sums as compensation for its consequences.

Economic Theory, 2012

Taking climate change as an example, this paper provides new insights on the optimal provision of a long-term public good within and across generations. We write the Bowen-Lindhal-Samuelson (BLS) conditions for the optimal provision of the public good in a world divided into N countries, with two periods, present and future, and we simultaneously determine the optimal response in the first and second periods for a given rate of pure time preference. However, the Negishi weights at second period cannot be determined unambiguously, even under a "no redistribution constraint" within each generation, because they depend on non-observable future incomes; and thus on the answers to two often-overlooked ethical questions: (i) Do rich countries agree on deals which recognize that developing countries may catch up with developed countries in the long run, or do they use their negotiating powers to preserve the current balance of power? And (ii) does each country consider only the welfare of its own future citizens (dynastic solidarity) or does it extend its concern to all future human beings (universal solidarity

Development, 2008

Law and Philosophy Library, 2011

By examining the problem of climate change this paper develops (a) a substantial critique of the background assumptions that not only the formulation of economic theories but, in parts, also that of sociological/political theories are based on and (b) an approach to what should be understood by the term "ethics" with regard to the fifth IPCC Assessment Report 2014. However, ethics do not "supplement" the "efficiency considerations" which up to now have dominated the practical results of the IPCC; rather they have to supersede them. It will be demonstrated that the supposed rationality behind the costbenefit analysis used by economists and the IPCC -in correspondence to neoclassical economic theory -in order to more or less calculate mathematically the ideal climate policy, is only vaguely visible as both incorrect and incomplete normative and descriptive assumptions are incorporated into the calculation of what is supposed to be "efficient" climate policy. Accordingly, keywords are: predated and too optimistic climate data; problematic handling of prognosis uncertainty; missing important consequences of global warming such as wars over resources; the limits of growth are not taken into account; improper quantification of what cannot be quantified; incorrect discounting of future events; ethical and democratic deficiencies of "efficiency/preference theory" (to be clear, the problem lies within normative preference theory itself and not within the descriptive anthropology of the so called "homo economicus" which is often criticised in a rather misleading manner).