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Paris: Beyond the Climate Dead End through Pledge and Review? / Robert O. Keohane and Michael Oppenheimer. Belfer Center for Science and International Affairs, Harvard Kennedy School, August 2016, 14 p. (Harvard Project on Climate Agreements Discussion Paper 2016-85) http://belfercenter.ksg.harvard.edu/publication/26907/paris.htmlThe Paris Climate Agreement of December 2015 marks a decisive break from the unsuccessful Kyoto regime. Instead of targets and timetables, it established a pledge and review system, under which states will offer Nationally Determined Contributions (INDCs) to reducing emissions that cause climate change. But this successful negotiation outcome was achieved at the price of vagueness of obligations and substantial discretion for governments. Many governments will be tempted to use the vagueness of the Paris Agreement, and the discretion that it permits, to limit the scope or intensity of their proposed actions. Whether pledge and review under the Paris Agreement will lead to effective action against climate change will therefore depend on the inclination both of OECD countries and newly industrializing countries to take costly actions, which for the OECD countries will include financial transfers to their poorer partners. Domestic politics will be crucial in determining the attitudes of both sets of countries to pay such costs. The actual impact of the Paris Agreement will depend on whether it can be used by domestic groups favoring climate action as a point of leverage in domestic politics—that is, in a "two-level game" simultaneously involving both international and domestic politics.Priority for the Worse Off and the Social Cost of Carbon / M. Adler, D. Anthoff, V. Bosetti, G. Garner, K. Keller, N. Treich. Milan : Fondazione Eni Enrico Mattei, 2016, 32 p. (Nota di Lavoro 55.2016) http://www.feem.it/userfiles/attach/2016851029234NDL2016-055.pdfThe social cost of carbon (SCC) is a monetary measure of the harms from carbon emission. Specifically, it is the reduction in current consumption that produces a loss in social welfare equivalent to that caused by the emission of a ton of CO2. The standard approach is to calculate the SCC using a discounted-utilitarian social welfare function (SWF)—one that simply adds up the well-being numbers (utilities) of individuals, as discounted by a weighting factor that decreases with time. The discounted-utilitarian SWF has been criticized both for ignoring the distribution of well-being, and for including an arbitrary preference for earlier generations. Here, we use a prioritarian SWF, with no time-discount factor, to calculate the SCC in the integrated assessment model RICE. Prioritarianism is a well-developed concept in ethics and theoretical welfare economics, but has been, thus far, little used in climate scholarship. The core idea is to give greater weight to well-being changes affecting worse off individuals. We find substantial differences between the discounted-utilitarian and non-discounted prioritarian SCC.Inequality and the Social Cost of Carbon / David Anthoff, Johannes Emmerling. Milan : Fondazione Eni Enrico Mattei, 2016, 38 p. (nota di lavoro ; 2016.054) http://www.feem.it/userfiles/attach/2016728110144NDL2016-054.pdfThis paper presents a novel way to disentangle inequality aversion over time from inequality aversion between regions in the computation of the Social Cost of Carbon. Our approach nests a standard efficiency based Social Cost of Carbon estimate and an equity weighted Social Cost of Carbon estimate as special cases. We also present a methodology to incorporate more fine grained regional resolutions of income and damage distributions than typically found in integrated assessment models. Finally, we present quantitative estimates of the Social Cost of Carbon that use our disentangling of different types of inequality aversion. We use two integrated assessment models (FUND and RICE) for our numerical exercise to get more robust findings. Our results suggest that inequality considerations lead to a higher (lower) SCC values in high (low) income regions relative to an efficiency based approach, but that the effect is less strong than found in previous studies that use equity weighting. Our central estimate is that the Social Cost of Carbon increases roughly by a factor of 2.5 from a US perspective when our disentangled equity weighting approach is used.Did the Paris Agreement Plant the Seeds of a Climate Consistent International Financial Regime? / Dipak Dasgupta, Etienne Espagne, Jean-Charles Hourcade, Irving Minzer, Seyni Nafo, Baptiste Perissin-Fabert, Nick Robins, Alfredo Sirkis. Milan : Fondazione Eni Enrico Mattei, 2016 (nota di lavoro ; 2016.050) http://www.feem.it/userfiles/attach/2016726121204NDL2016-050.pdfFinance has been critical to the development of interest and momentum concerning the Paris Agreement, which emerged from COP21. However, a quick scan of the accord could lead many to derive a disappointing picture because of the absence of practical commitments to financial devices that can limit the risks of climate change. We support the opposite view that the text marks a new departure by committing countries to “making financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development ». This was matched by parallel developments such as the Financial Stability Board’s launch of a new Task Force on climate disclosure. We argue that, further steps now need to be taken within the broader context of financing the new model of prosperity laid out in the UN Sustainable Development Goals (UN, September 2015). At a time of increasing financial uncertainty and inadequate investment in the real economy, putting in place a framework for financing the transition to a low-carbon, resilient model of development is now an economic imperative – and an immense opportunity. Mitigating the systemic risks of climate change while putting the global financial system on a path toward balanced and sustainable development, is in the long-term strategic interests of both industrialized and developing countries and we suggest what practical steps can be accomplished in a near future in this direction.