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A Dynamic Analysis of Human Welfare in a Warming Planet

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Author Info
Humberto Llavador ()
John E. Roemer
Joaquim Silvestre

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Abstract

Climate science indicates that climate stabilization requires low GHG emissions. Is this consistent with nondecreasing human welfare? Our welfare index, called quality of life (QuoL), emphasizes education, knowledge, and the environment. We construct and calibrate a multigenerational model with intertemporal links provided by education, physical capital, knowledge and the environment. We reject discounted utilitarianism and adopt, first, the Intergenerational Maximin criterion, and, second, Sustainable Growth Optimization, that maximizes the QuoL of the first generation subject to a given future rate of growth. We apply these criteria to our calibrated model via a novel algorithm inspired by the turnpike property. The computed paths yield levels of QuoL higher than the year 2000 level for all generations. They require the doubling of the fraction of labor resources devoted to the creation of knowledge relative to the reference level, whereas the fractions of labor allocated to consumption and leisure are similar to the reference ones. On the other hand, higher growth rates require substantial increases in the fraction of labor devoted to education, together with moderate increases in the fractions of labor devoted to knowledge and the investment in physical capital.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1110.

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Date of creation: Sep 2008
Date of revision: Oct 2009
Handle: RePEc:upf:upfgen:1110

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Web page: http://www.econ.upf.edu/

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Related research
Keywords: Quality of life; climate change; education; maximin; growth;

Other versions of this item:

Find related papers by JEL classification:
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounting

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  12. Kenneth Arrow, 2007. "Global Climate Change: A Challenge to Policy," The Economists' Voice, Berkeley Electronic Press, vol. 4(3), pages 2. [Downloadable!]
  13. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2009. "Intergenerational Justice when Future Worlds Are Uncertain," Cowles Foundation Discussion Papers 1692, Cowles Foundation, Yale University. [Downloadable!]
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