Title: Equity Weighting and the Social Cost of Carbon
David Anthoff is an environmental economist who studies climate change and environmental policy. He co-develops the integrated assessment model FUND that is used widely in academic research and in policy analysis. His research has appeared in Science, the Journal of Environmental Economics and Management, Environmental and Resource Economics, the Oxford Review of Economic Policy and other academic journals. He contributed a background research paper to the Stern Review and has advised numerous organizations (including US EPA and the Canadian National Round Table on the Environment and the Economy) on the economics of climate change.
He is an assistant professor in the Energy and Resources Group at the University of California, Berkeley. Previously he was an assistant professor in the School of Natural Resources and Environment at the University of Michigan, a postdoc at the University of California, Berkeley and a postdoc at the Economic and Social Research Institute in Ireland. He also was a visiting research fellow at the Smith School of Enterprise and the Environment, University of Oxford.
He holds a PhD (Dr. rer. pol.) in economics from the University of Hamburg (Germany) and the International Max Planck Research School on Earth System Modelling, a MSc in Environmental Change and Management from the University of Oxford (UK) and a M.Phil. in philosophy, logic and theory of science from Ludwig-Maximilians-Universität München (Germany).
I investigate the optimal distribution of greenhouse gas emission reductions over time and between regions. Sandmo (2006) has shown that optimal marginal abatement costs should differ between different countries if no lump-sum transfers between those countries are possible. I extend his static result to a dynamic stock externality, so that it can be applied to climate change. I then use the integrated assessment model FUND to compute optimal marginal carbon abatement costs schedules for sixteen world regions for the next century. I find that if lump-sum transfers are not possible, a utilitarian global planner would have rich countries mitigate more and poor countries less than in a policy that is based purely on efficiency considerations. Ruling out lumpsum transfers has an ambiguous effect on the optimal quantity of global emission reductions: under standard assumptions about inequality aversion, optimal emission reductions are lower if lump-sum transfers between countries are ruled out. In a sensitivity analysis, I assume a more inequality-averse decision maker. In this scenario, optimal emission reductions are larger when lump-sum transfers are ruled out.