Economics and Philosophy, 33 (2017) 337–365 © Cambridge University Press doi:10.1017/S0266267117000049 First published online 26 April 2017 cambridge.org/eap DOES A DISCOUNT RATE MEASURE THE COSTS OF CLIMATE CHANGE? CHRISTIAN TARSNEY * Abstract: I argue that the use of a social discount rate to assess the consequences of climate policy is unhelpful and misleading. I consider two lines of justification for discounting: (i) ethical arguments for a ‘pure rate of time preference’ and (ii) economic arguments that take time as a proxy for economic growth and the diminishing marginal utility of consumption. In both cases I conclude that, given the long time horizons, distinctive uncertainties, and particular costs and benefits at stake in the climate context, discount rates are at best a poor proxy for the normative considerations they are meant to represent. Keywords: climate change, discount rate, environmental ethics, Ramsey formula, time preference 1. CLIMATE CHANGE The reality and the dangers of anthropogenic climate change are a matter of increasingly robust scientific consensus (Cook et al. 2013; IPCC 2014). It is widely agreed that global mean surface temperature (GMST) has begun to increase and that this increase will continue over the coming century. The most recent report of the Intergovernmental Panel on Climate Change (IPCC), for instance, estimates that by the year 2100, GMST will probably have increased by at least 1.5 ◦ C relative to the baseline period 1850–1900, across a wide range of emissions scenarios, but that the increase could exceed 4 ◦ C, especially under more pessimistic assumptions about the path of emissions (Stocker et al. 2013: 20). Nevertheless, climate change remains a matter of enormous predictive uncertainty. On the climate science side, these uncertainties ∗ Department of Philosophy, Skinner Building, University of Maryland, College Park, MD 20742, USA. Email: ctarsney@umd.edu. URL: http//:www.philosophy.umd.edu/ people/ctarsney. 337 of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0266267117000049 Downloaded from https://www.cambridge.org/core. IP address: 54.159.79.137, on 25 Apr 2022 at 21:27:41, subject to the Cambridge Core terms