Equity weighting and the marginal damage costs of climate change

D. Anthoff, C. Hepburn, R.S.J. Tol

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Climate change will give rise to different impacts in different countries, and different countries have different levels of development. Equity-weighted estimates of the (marginal) impact of greenhouse gas emissions reflect these differences. This paper analyses the impact of equity weighting on the marginal damage cost of carbon dioxide emissions, and reaches four main conclusions. First, equity-weighted estimates are substantially higher than estimates without equity-weights; equity-weights may even change the sign of the social cost estimates. Second, estimates differ by two orders of magnitude depending on the region to which the equity weights are normalised. Third, equity-weighted estimates are sensitive to the resolution of the impact estimates. Depending on the assumed intra-regional income distribution, estimates may be more than twice as high if national rather than regional impacts are aggregated. Fourth, variations in the assumed inequality aversion have different impacts in different scenarios, not only because different scenarios have different emissions and hence warming, but also because different scenarios have different income differences, different growth rates, and different vulnerabilities. © 2008 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)836-849
JournalEcological Economics
Volume68
Issue number3
DOIs
Publication statusPublished - 2009

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equity
damage
climate change
cost
income distribution
Damage
Weighting
Costs
Equity
Climate change
vulnerability
greenhouse gas
warming
carbon dioxide
income
Scenarios

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Anthoff, D. ; Hepburn, C. ; Tol, R.S.J. / Equity weighting and the marginal damage costs of climate change. In: Ecological Economics. 2009 ; Vol. 68, No. 3. pp. 836-849.
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Equity weighting and the marginal damage costs of climate change. / Anthoff, D.; Hepburn, C.; Tol, R.S.J.

In: Ecological Economics, Vol. 68, No. 3, 2009, p. 836-849.

Research output: Contribution to JournalArticleAcademicpeer-review

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AB - Climate change will give rise to different impacts in different countries, and different countries have different levels of development. Equity-weighted estimates of the (marginal) impact of greenhouse gas emissions reflect these differences. This paper analyses the impact of equity weighting on the marginal damage cost of carbon dioxide emissions, and reaches four main conclusions. First, equity-weighted estimates are substantially higher than estimates without equity-weights; equity-weights may even change the sign of the social cost estimates. Second, estimates differ by two orders of magnitude depending on the region to which the equity weights are normalised. Third, equity-weighted estimates are sensitive to the resolution of the impact estimates. Depending on the assumed intra-regional income distribution, estimates may be more than twice as high if national rather than regional impacts are aggregated. Fourth, variations in the assumed inequality aversion have different impacts in different scenarios, not only because different scenarios have different emissions and hence warming, but also because different scenarios have different income differences, different growth rates, and different vulnerabilities. © 2008 Elsevier B.V. All rights reserved.

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