Intra- and Intergenerational Equity in Climate Policy

Attempts to establish an international agreement that would lead to significant reductions in greenhouse gas emissions have so far failed. One of the difficulties is the time profile of the problem, where the present generation has to take the burden of improving the climate of future generations. Thus, those who pay for the mitigation do not gain the benefits.

Climate policy presumes, however, that the world will benefit from mitigation, i.e., that the benefits will be higher than the costs. How is it then possible to share the benefits in such a way that every generation will be better off?

This would require transfers from future generations to the present generation and could be implemented if the present generation invests less in real or financial capital that would benefit the future, but more in the environment. In this way, the present generation may not reduce its consumption level but still invest in climate measures.

In a project that Snorre Kverndokk will work on while visiting CES in May, he will explore such possibilities both analytically and numerically using the RICE model. The project is a collaboration with Michael Hoel (University of Oslo), Sverre Kittelsen (Frisch Centre) and Jae Edmonds (JGCRI).

Snorre Kverndokk is a Senior Research Fellow at Ragnar Frisch Centre for Economic Research, Oslo, and the director of CREE – Oslo Centre for Research on Environmentally friendly Energy. He holds a PhD in Economics from the University of Oslo, and is mainly working on energy and environmental economics as well as health economics. He is co-author of a recent CESifo Working Paper (4285) entitled: “The Trade-off between Intra- and Intergenerational Equity in Climate Policy”.