IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v18y2011i12p1163-1166.html
   My bibliography  Save this article

Social time preference and the optimal carbon price

Author

Listed:
  • Ross Guest

Abstract

This article examines the implications of alternative social time preference assumptions for the optimal carbon price by numerical simulations of a simple Ramsey model. Three specifications of social time preferences are compared: a constant social time preference rate (stpr), decreasing social impatience or hyperbolic social preferences and increasing social impatience. The results show nontrivial effects on the optimal carbon price. The policy implication is that value judgements about intergenerational welfare, reflected in stpr, have implications for policies aimed at achieving a target carbon price. These value judgements therefore ought to be made explicit in setting target carbon prices over time.

Suggested Citation

  • Ross Guest, 2011. "Social time preference and the optimal carbon price," Applied Economics Letters, Taylor & Francis Journals, vol. 18(12), pages 1163-1166.
    • Handle: RePEc:taf:apeclt:v:18:y:2011:i:12:p:1163-1166
    DOI: 10.1080/13504851.2010.528352
    as

    Download full text from publisher

    File URL: http://www.informaworld.com/openurl?genre=article&doi=10.1080/13504851.2010.528352&magic=repec&7C&7C8674ECAB8BB840C6AD35DC6213A474B5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504851.2010.528352?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Graciela Chichilnisky, 1997. "What Is Sustainable Development?," Land Economics, University of Wisconsin Press, vol. 73(4), pages 467-491.
    2. Frederick Ploeg & Cees Withagen, 1991. "Pollution control and the Ramsey problem," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 1(2), pages 215-236, June.
    3. Farzin, Y. H., 1996. "Optimal pricing of environmental and natural resource use with stock externalities," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 31-57, October.
    4. David I. Laibson, 1996. "Hyperbolic Discount Functions, Undersaving, and Savings Policy," NBER Working Papers 5635, National Bureau of Economic Research, Inc.
    5. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, October.
    6. Partha Dasgupta & Eric Maskin, 2005. "Uncertainty and Hyperbolic Discounting," American Economic Review, American Economic Association, vol. 95(4), pages 1290-1299, September.
    7. Li, Chuan-Zhong & Lofgren, Karl-Gustaf, 2000. "Renewable Resources and Economic Sustainability: A Dynamic Analysis with Heterogeneous Time Preferences," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 236-250, November.
    8. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(2), pages 231-257, April.
    9. Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
    10. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
    11. Serdar Sayman & Ayse Öncüler, 2009. "An Investigation of Time Inconsistency," Management Science, INFORMS, vol. 55(3), pages 470-482, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ross Guest, 2014. "Optimal Pollution Abatement Under ‘Sustainable’ and Other Social Time Preferences," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(3), pages 373-390, July.
    2. John Creedy & Hemant Passi, 2018. "Public Sector Discount Rates: A Comparison of Alternative Approaches," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(1), pages 139-157, March.
    3. Aline Chiabai & Ibon Galarraga & Anil Markandya & Unai Pascual, 2013. "The Equivalency Principle for Discounting the Value of Natural Assets: An Application to an Investment Project in the Basque Coast," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(4), pages 535-550, December.
    4. Birol, Ekin & Koundouri, Phoebe & Kountouris, Yiannis, 2010. "Assessing the economic viability of alternative water resources in water-scarce regions: Combining economic valuation, cost-benefit analysis and discounting," Ecological Economics, Elsevier, vol. 69(4), pages 839-847, February.
    5. John Creedy & Ross Guest, 2008. "Sustainable Preferences and Damage Abatement:Value Judgments and Implications for Consumption Streams," Department of Economics - Working Papers Series 1026, The University of Melbourne.
    6. Cameron Hepburn & Greer Gosnell, 2014. "Evaluating impacts in the distant future: cost–benefit analysis, discounting and the alternatives," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 9, pages 140-159, Edward Elgar Publishing.
    7. Kitti, Mitri, 2018. "Sustainable social choice under risk," Mathematical Social Sciences, Elsevier, vol. 94(C), pages 19-31.
    8. Hansen, Anders Chr., 2006. "Do declining discount rates lead to time inconsistent economic advice?," Ecological Economics, Elsevier, vol. 60(1), pages 138-144, November.
    9. Guest, Ross, 2010. "The economics of sustainability in the context of climate change: An overview," Journal of World Business, Elsevier, vol. 45(4), pages 326-335, October.
    10. Phoebe Koundouri, 2008. "The Case for Declining Long-Term Discount Rates in the Evaluation of Flood-Defence Investments," DEOS Working Papers 0805, Athens University of Economics and Business.
    11. Verchère, Alban, 2011. "Le développement durable en question : analyses économiques autour d’un improbable compromis entre acceptions optimiste et pessimiste du rapport de l’Homme à la Nature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 87(3), pages 337-403, septembre.
    12. Le Kama, Alain Ayong & Schubert, Katheline, 2007. "A Note On The Consequences Of An Endogenous Discounting Depending On The Environmental Quality," Macroeconomic Dynamics, Cambridge University Press, vol. 11(2), pages 272-289, April.
    13. Jouini, Elyès & Marin, Jean-Michel & Napp, Clotilde, 2010. "Discounting and divergence of opinion," Journal of Economic Theory, Elsevier, vol. 145(2), pages 830-859, March.
    14. Graciela Chichilnisky & Peter J. Hammond & Nicholas Stern, 2020. "Fundamental utilitarianism and intergenerational equity with extinction discounting," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(2), pages 397-427, March.
    15. De Gorter, Harry & Tsur, Yacov, 2008. "Towards a Genuine Sustainability Standard for Biofuel Production," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 188419, International Consortium on Applied Bioeconomy Research (ICABR).
    16. Hepburn, Cameron J. & Koundouri, Phoebe, 2007. "Recent advances in discounting: Implications for forest economics," Journal of Forest Economics, Elsevier, vol. 13(2-3), pages 169-189, August.
    17. Mouez Fodha, 2015. "Nuclear waste storage and environmental intergenerational externalities," International Journal of Sustainable Development, Inderscience Enterprises Ltd, vol. 18(1/2), pages 94-114.
    18. Groom, Ben & Hepburn, Cameron & Koundouri, Phoebe & Pearce, David, 2007. "Implications of declining discount rates: Climate Change Policy in the UK," MPRA Paper 38428, University Library of Munich, Germany.
    19. repec:hal:pseose:insu-01105358 is not listed on IDEAS
    20. Hepburn, Cameron & Koundouri, Phoebe & Panopoulou, Ekaterini & Pantelidis, Theologos, 2009. "Social discounting under uncertainty: A cross-country comparison," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 140-150, March.
    21. Winston W. Chang, 2017. "World Trade and the Environment: Issues and Policies," Pacific Economic Review, Wiley Blackwell, vol. 22(3), pages 435-479, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:18:y:2011:i:12:p:1163-1166. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.