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Name of Article:
A Social Discount Rate for Climate Damage to Future Generations Based on Regulatory Law 
Title of Book/Journal:
Climatic Change 
Type:
Article 
English Translation:
 
Publication Date:
May 2006     
Author(s):
Davidson , Marc
 Editor(s):
 
Volume:
76 
Issue: 1-2
Pages: 55 - 72  
Corporate Author:
 
Publisher:
Springer   
EPA Number:
 
Other Number:
   
Keyword(s):
INTERGENERATIONAL
INTERGENERATIONAL JUSTICE
SOCIAL DISCOUNT RATE
CLIMATE CHANGE
Economic Justice
Comments:
 
 
 
 
    
 
Annotation:
This article examines the implications for the social discount rate for damage due to climate change if risk to future generations is handled in accordance with the laws regulating our handling of risk to contemporaries. The conclusions are the following. Under current law, neither geographic distance nor differences in wealth between risk creator and risk bearer play any part in establishing a standard of `reasonable care'. The concept of intergenerational justice requires these same principles to be applied in the intergenerational context too, implying a zero consumption rate of interest for climate damage. Assuming that the extent to which mitigation is at the expense of alternative investments is equal to society's marginal propensity to save, the social discount rate becomes society's marginal propensity to save times the long-term market rate of return on private investment, implying a social discount rate of around one per cent or a fraction of one per cent. This formula is exact under the assumption of average saving behaviour and by attributing consumption losses due to investment in damage prevention before damage occurs to the risk creator and after damage occurs to the risk bearer.
 
 
       
 
 
 

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