Discussion Paper - Harvard Project on Climate Agreements, Belfer Center

On a World Climate Assembly and the Social Cost of Carbon

    Author:
  • Martin L. Weitzman
| November 2016

Abstract

This paper postulates the conceptually useful allegory of a futuristic "World Climate Assembly" (WCA) that votes for a single worldwide price on carbon emissions via the basic democratic principle of one-person one-vote majority rule. If this WCA framework can be accepted in the first place, then voting on a single internationally- binding minimum carbon price (the proceeds from which are domestically retained) tends to counter self-interest by incentivizing countries or agents to internalize the externality. I attempt to sketch out the sense in which each WCA-agent's extra cost from a higher emissions price is counter-balanced by that agents extra benefit from inducing all other WCA-agents to simultaneously lower their emissions in response to the higher price. The first proposition of this paper derives a relatively simple formula relating each emitter's single-peaked most-preferred world price of carbon emissions to the world "Social Cost of Carbon" (SCC). The second and third propositions relate the WCA-voted world price of carbon to the world SCC. I argue that the WCA-voted price and the SCC are unlikely to differ sharply. Some implications are discussed. The overall methodology of the paper is a mixture of mostly classical with some behavioral economics.

Weitzman's research builds on his previous paper released by the Harvard Project, "Voting on Prices vs. Voting on Quantities in a World Climate Assembly" (June 2015).


Martin L. Weitzman, Harvard University

For more information on this publication: Please contact Harvard Project on Climate Agreements
For Academic Citation: Weitzman, Martin L.. “On a World Climate Assembly and the Social Cost of Carbon.” Discussion Paper, 2016-86, Harvard Project on Climate Agreements, Belfer Center, November 2016.

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