Weighing Climate Futures: A Critical Review of the Application of Economic Valuation

Richard B. Norgaard

in The Oxford Handbook of Climate Change and Society

Published in print August 2011 | ISBN: 9780199566600
Published online January 2012 | | DOI:

Series: Oxford Handbooks in Politics & International Relations

 Weighing Climate Futures: A Critical Review of the Application of Economic Valuation

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Climate change is a special case of the generic problem of sustainable development, but the valuation methods and analytics of economics were never adjusted for sustainable development. This article describes the early history of cost-benefit analysis and the concerns of economists with distributional issues, who benefits and who loses from a project, in the development happened in economic valuation of damages. It presents a brief history of climate economic analysis and some of the early controversies. It also describes a general equilibrium framework, which helps see the shortcomings of partial equilibrium analysis for a global problem such as climate change. Nevertheless, while critically important insights are highlighted through general equilibrium analysis, ‘answers’ to basic questions do not become clearer. In addition, the article covers the Stern Review and its impact on the economics of climate change. Furthermore, this article summarizes the key points while adding an institutional dimension to the arguments.

Keywords: climate future; economic valuation; partial equilibrium analysis; general equilibrium analysis; Stern Review

Article.  7175 words. 

Subjects: Politics ; Public Policy ; Political Economy

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