Climate Policy under Sustainable Discounted Utilitarianism



The stationary equivalent consumption c of a consumption stream 0c is the con-
sumption level c, which if held constant yields the same welfare as the consumption
stream
0c. By (w.2), the stationary equivalent consumption c of a consumption
stream
0c under DU satisfies U(c) = w(0c), or since U is strictly increasing:

c = U-1(w(oc)) .

By (W.2), the stationary equivalent consumption c of a consumption stream 0c under
SDU satisfies U
(c) = W(0c), or since U is strictly increasing:

c = U-1(W(oc)) .

We use the stationary equivalent consumption to express non-marginal welfare dif-
ferences in consumption terms (more on this in Section 4).

2.1 Variable population and uncertainty

Asheim and Mitra (2010) introduce SDU in a deterministic setting where population
growth is not explicitly discussed. Application of SDU to climate change, and indeed
to a number of other policy issues, requires explicit treatment of population growth
and uncertainty, however, and we turn to these issues now.

In Asheim and Mitra (2010, p. 150), consumption in period t is interpreted as “a
non-negative indicator of the wellbeing of generation t”. However, how do we compare
the wellbeing of the present generation with the wellbeing of future generations if
population size changes over time?

One possibility is to represent the wellbeing of each generation by the product
of population size and the utility derived from per-capita consumption. This is the
position of ‘classical utilitarianism’. An alternative position is to let the wellbeing
of each generation depend only on per-capita consumption; this is called ‘average
utilitarianism’. There is a substantial literature taking a stance in favour of classical
utilitarianism (see, e.g. Meade, 1955; Mirrlees, 1967; Dasgupta, 2001; Blackorby et
al., 2005). Moreover, this position is standard in the empirical literature on climate-
policy evaluation. Against this background we apply classical utilitarianism in this
paper, while carefully observing the need to make meaningful comparisons of present
utility with future welfare when developing SDU within this position.

Let ct = Ct /Nt be per capita consumption at time t, where population Nt varies
exogenously with time. Classical DU welfare at time t, w
t , depends on



More intriguing information

1. PROFITABILITY OF ALFALFA HAY STORAGE USING PROBABILITIES: AN EXTENSION APPROACH
2. The name is absent
3. Computing optimal sampling designs for two-stage studies
4. Transgression et Contestation Dans Ie conte diderotien. Pierre Hartmann Strasbourg
5. The name is absent
6. The name is absent
7. American trade policy towards Sub Saharan Africa –- a meta analysis of AGOA
8. The name is absent
9. The name is absent
10. Heavy Hero or Digital Dummy: multimodal player-avatar relations in FINAL FANTASY 7
11. A Study of Adult 'Non-Singers' In Newfoundland
12. Income Taxation when Markets are Incomplete
13. The name is absent
14. Optimal Tax Policy when Firms are Internationally Mobile
15. The name is absent
16. Monetary Discretion, Pricing Complementarity and Dynamic Multiple Equilibria
17. Opciones de política económica en el Perú 2011-2015
18. The name is absent
19. EXECUTIVE SUMMARY
20. Monetary Policy News and Exchange Rate Responses: Do Only Surprises Matter?