The economics of discounting and carbon valuation under deep uncertainties

Christian Gollier

The Atkinson Memorial Lecture is an annual distinguished lecture series established in 2018 in memory of Professor Sir Tony Atkinson, jointly by the Global Priorities Institute (GPI) and the Department of Economics at Oxford University. The aim is to encourage research among academic economists on topics related to global prioritisation - using evidence and reason to figure out the most effective ways to improve the world. This year we are delighted to have Christian Gollier, the Executive Director of the Toulouse School of Economics (TSE), deliver the Atkinson Memorial Lecture.

Abstract

The energy transition will be costly, but it will reduce much larger climate damages in the future without it. In order to compare these immediate costs with their future benefits, one must estimate the “carbon value”, which is ideally equal to the discounted value of the flow of marginal climate damages. This raises the issue of the rate at which very distant climate damages should be discounted. I will explore the economic and moral issues behind our discounting systems in relation to our responsibilities towards future generations, and how they translate into a climate discount rate. I will be particularly interested in the role of the deep uncertainties surrounding the fate of our civilization on this Planet, the intensity of climate change, and the speed of green technological progress.

About the speaker

Christian Gollier is the Executive Director of the Toulouse School of Economics (TSE), which he founded with Jean Tirole in 2007. His research ranges from the fields of uncertainty economics, environmental economics, finance, consumption, insurance, and cost-benefit analysis, with a particular interest in long-term effects. He has received numerous scientific awards, such as the Paul Samuelson Award in 2001 for his book entitled “The economics of Risk and Time” (MIT Press), as well as an ERC advanced grant.  He has been a lead author of the 4th and 5th reports of the IPCC, and is past-president of the European Association of Environmental and Resources Economists.