Climate-economy model scenario runs and sensitivity analysis using DICE-2016

This paper assesses the prospects for climate stabilization from both
positive and normative economic perspectives, and with an eye to the
conditions necessary for collective action across the three domains:
domestic, international, and intergenerational. While it is
well-established that international freeriding and transaction costs pose
major impediments to successful environmental agreements, this analysis
identifies the intergenerational domain as the source of 
intractability due to long delays between enduring mitigation costs and
enjoying their eventual climate benefits. This lag causes the net benefits
for median-aged voters’ to be negative over their expected remaining
lifespans. Drawing on estimates from several Integrated Assessment Models
of the benefits and costs of climate stabilization actions, the analysis
concludes that a program of domestic and international climate actions
will be hopelessly stymied by the failure of the actions to pass
individual and collective rationality tests. However, the dire
implications of this conclusion leaves the door open to the possibility
that some change in circumstances could undercut this conclusion. The
assignment of rights, in particular, has that potential. Indeed, these
circumstances echo the canonical insights from Ron Coase’s observation in
The Problem of Social Cost (1960) that the arrangement of rights can have
large effects on welfare when transaction costs for an externality are
high. Current climate rights amount to a de facto open access right to
pollute the atmosphere. Were a right to a stable climate for both for
current and future generations recognized, added weight or leverage would
apply in support of climate stabilization policies and international
agreements. These legal changes could represent a counterweight to offset
the inadequacy of support from the current self-interested generation.
Indeed, some recent climate litigation argues that many nations’
constitutions already encompass an affirmative right to a stable climate,
a proposition that could represent an inimitable means to break the
climate impasse.