From efficiency to justice: utility as the informational basis of climate change strategies, and some alternatives

Produced as part of the Developing climate science and economics CCCEP research programme theme

Working Paper 13

The aim of this paper is to consider, from an ethical point of view, the role that economics should play in evaluating climate change strategies. Economics has been a prominent player in the intellectual and political debate about how to respond to climate change, and frequently a controversial one. Much of the controversy apparently surrounds how the consumption of individuals living in different places, at different times and in different states is weighted. On the temporal dimension, this issue is represented by the infamous discount rate. However, I argue that an equally, if not more, important ethical judgement made by economics comes earlier, when the informational basis of evaluation is accepted to be nothing more and nothing less than the ‘utility’ of individuals.

This is by no means an original insight, but on the basis of it I try to make constructive suggestions as to how evaluation of climate change can move forward, drawing on the strengths of economics, but compensating for its weaknesses. I draw on the work of John Broome (1999) and Amartya Sen (1987), among others, to argue that the strength of the economic approach lies in its emphasis on interdependence and comparability of changes to human wellbeing. That is, any climate strategy, be it adaptation, mitigation or ‘business-as-usual’, consists in changes to human wellbeing that are linked across time, space and states. Any convincing evaluation of such strategies must be equipped to think about the comparisons entailed.

The weakness, however, lies in seeing human wellbeing solely through a ‘utility’ lens. Thus what would constitute real progress would be a systematic evaluation of the positive and negative changes in human wellbeing as a result of climate change strategies, on multiple dimensions of that wellbeing. It might be argued that existing assessments, such as those of the Intergovernmental Panel on Climate Change (IPCC), fit the bill, but I argue that, because they are informal, we miss an opportunity to bring to bear formal methods of comparison that might prove decisive in the climate debate.

Simon Dietz