On a World Climate Assembly and the Social Cost of Carbon

34 Pages Posted: 14 Nov 2016 Last revised: 3 May 2023

See all articles by Martin Weitzman

Martin Weitzman

Harvard University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 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 agent's 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.

Suggested Citation

Weitzman, Martin L., On a World Climate Assembly and the Social Cost of Carbon (November 2016). NBER Working Paper No. w22813, Available at SSRN: https://ssrn.com/abstract=2868911

Martin L. Weitzman (Contact Author)

Harvard University - Department of Economics ( email )

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