Philosophy aligns with economics on how to value future generations in climate policy

In a new study published in Nature Climate Change, environmental economists including the University of Exeter's Professor Ben Groom found consensus between the two academic disciplines over an aspect of climate policy known as the 'social discount rate', with philosophers offering support for a rate of 2% -- a value predominantly backed by economists, and which is in line with UN climate targets.

Social discount rates are used by governments to determine how costs and benefits that occur in the future -- such as the impacts of climate mitigation projects, policies and programmes -- are valued in the present.

A low discount rate places greater value on the benefits to future generations, such as those created by avoiding burning fossil fuels, and increases the costs of carbon emissions used in public investment appraisal.

The researchers analysed survey data from over 200 economists and philosophers with expertise in social discounting, who provided a range of qualitative and quantitative answers.

They found considerable agreement between the two disciplines for a long-term social discount rate of 2% and on analysing the survey data they found in each discipline the median discounting value resulted in temperature changes of around 1.4 degrees C by the end of the century, a figure in line with the UN Paris climate targets.

Small changes to the SDR have significant policy implications: the Trump administration's increase of the SDR from 3% to 7% reducing the social cost of carbon by a factor of seven, whereas New York State's decision to reduce its SDR to 2% rather than 3% made the social cost of carbon increase from $40 to $125 per tonne of CO₂.

The study is the first to attempt to build expert consensus on social discount rates outside the field of economics.

Expert advice -- predominantly from economists -- plays a key role in discounting and its application to climate policy, but the underlying ethical issues at stake fall outside most economists' expertise.

The findings therefore strengthen economists' arguments for a social discount rate of 2% by underpinning it with ethical concerns for the welfare of future generations and 'intergenerational equity'.

Professor Ben Groom, Dragon Capital Chair in Biodiversity Economics at the University of Exeter said: "That economists and philosophers can agree on policy outcomes builds academic expert consensus, and the paper will help build consensus in favour of the new guidance as it works its way through the US government.

"The different perspectives of philosophers are complementary to those of economists and offer ethical checks and balances within integrated assessment models to narrow the set of acceptable climate policies, or offer altogether different procedural lenses through which to evaluate climate policy. These insights will be overlooked if economists continue to dominate the social discounting debate."