Climate Policy under Sustainable Discounted Utilitarianism

Table 1. Uncertain parameters for simulation of modified DICE-2007.

*In natural logarithm space.

economic output, which in turn is determined in significant measure by productivity
growth and by the stock of labour. In addition, where a classical utilitarian SWF is
applied, the larger (smaller) is the population when the impacts of climate change
occur, the higher (lower) is the social valuation of climate damage. However, while
CO2 emissions are proportional to output, the proportion is usually assumed to
decrease over time due to changes in economic structure away from CO2-intensive
production activities, and to increases in the efficiency of output with respect to
CO2 emissions in a given activity. In DICE, this is achieved by virtue of a variable
representing the ratio of emissions/output, which decreases over time as a function
of a rate-of-decarbonisation parameter. A further check on industrial CO2 emissions
is provided in the long run by the finite total remaining stock of fossil fuels, which
is also treated here as an uncertain parameter.

The fifth uncertain parameter in Table 1 is the price of a so-called ‘backstop’ tech-

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