Public Debt and Intergenerational Justice

In order to guarantee intergenerational justice to prevail, we as a society should “keep” a certain amount of accumulated debt and pass it on to future generations.

This sounds rather counter-intuitive, doesn’t it? In public debate debt of whatever kind, but public debt especially, is mostly seen as something bad and running counter the ideal of intergenerational justice. In a recent discussion I took part in, however, this counter-intuitive argument has been made by one of my colleagues (whom I esteem for his ethical and scientific intuitions). I initially had rejected it, but after thinking about it for a while, I came to the conclusion that he might be right. Let me explain why. Continue reading

Connecting Climate Science and Economics, Part 2

In this post I am going to give a summary of the second part of Climate Economics: The State of the Art by Frank Ackerman and Elizabeth Stanton of the Stockholm Environment Institute, which deals with recent advances in the economics of climate change. Part 1, with a discussion of newest results from the climate science, can be found here. A summary of the above report’s overview of research in the economics of mitigation and adaptation will follow. Continue reading

Discounting in the Economics of Climate Change

It was frequently argued that the discount rate is the most important single figure in the economics of climate change. Due to this figure we observe large differences in policy recommendation between different economists of climate change (most notably, the choice of the discount rate determines the difference in what William Nordhaus on the one hand, and Nicholas Stern, on the other, call for). There is no concrete recommendation in standard economics how to discount long run benefits and losses. But it is clear that, if you want to compare benefits from the future with costs today, you need a discount rate. So far agreement prevails. The problem is the definition (or: choice) of the “right” discount rate, which involves economic forecasts as well as ethical decisions. In the following I shall present an overview about the main arguments in the discussion. Continue reading

The Worst “Climate Offender” in the World

A few years ago this headline (and similar ones in other media) made round:

China overtakes U.S. in greenhouse gas emissions [source]

For years the United States, the only industrialized country that refused to ratify the Kyoto Protocol, was blamed for being the global “climate offender” no. 1. This changed around 2006, when China became the world’s biggest greenhouse gas emitter. Though the U.S. remain a scapegoat, they are not alone any more. Although still a developing (i.e., industrializing) country, China is now emitting almost 20% of all anthropogenic greenhouse gases. The Chinese are considered the new “worst climate offender”. But this picture is terribly oversimplified. Continue reading