Climate Change and the Theory of Social Discounting

Abstract

In this paper, I discuss concepts and models that lie behind the ongoing debate over climate change and discounting. By reviewing the recent developments in the theory of social discounting, I show how and on what basis relatively low and declining discount rates can be justified, especially when uncertainty and/or substitutability matters. With a practical application to the cost-benefit analysis in mind, I briefly sketch some policy implications of these theoretical developments.