Traditional economic analysis recommends that a cost benefit analysis should be taken, but common sense tells us that it is not possible to monetarise all costs and benefits of climate change. Policies to tackle climate change today may cost a lot, but in the future it will save many lives. Economics would value the lives taken in terms of money. Once again, is this a sound method to use and can we put a monetary value on life?
The key organisation in charge of dealing with climate change policy on an international level is the Intergovernmental Panel on Climate Change (IPCC). The IPPC argued that the conventional economic way of placing monetary values on life reflect market prices is wrong. This way of valuing life leads to poor people having a low value of life, which means they are worth less! The IPCC report placed a value of $1,500,000 on lives in rich countries, $300,000 on middle-income countries and only $100,000 on poor countries. This difference also reveals that climate change policy is not beneficiary in poor countries, relative to rich countries.
Economists discount the future, which means that outcomes in the future matter less. Does this not ignore the gradual benefits of implementing a climate change policy? It is true that the outcomes of the climate change policy may be uncertain, but is it not our duty to protect the environment regardless. Famous philosopher John Rawls uses a 'veil of ignorance' to highlight the importance of acting in a way that looks after the wellbeing of future generations. Under the 'veil of ignorance' actions and decisions should be made, disguising which class,society and even generation you belong to making it just for everyone. This idea takes away self-interest and the discriminatory factors experienced today due to wealth diffrences. Rich countries have the resources to invest in research and development to reduce their carbon footprints, whilst poor people are even disregarded on how much their life is worth.
Rawls theory can easily be rejected because it does not always hold for resources that can be depleted easily. I would suggest Kantian theory of acting out of duty holds better for how the problem of climate change should be treated.
ReplyDeleteHi,
ReplyDeleteYour discussion on discount rates is interesting - my view is that we should at least apply some discount rate, however small. Chances are, technology will continue to improve, and what may seem a mammoth task to us now could be easier and cheaper to deal with in the future. However I totally see your point - with so much uncertainty about expected climate change, using a positive discount rate into the future could turn out to be a very poor decision!