TIME PREFERENCE, ABATEMENT COSTS, AND INTERNATIONAL CLIMATE POLICY - AN APPRAISAL OF IPCC-1995

This paper appraises current economic methodologies used in analyzing the social rate of time preference and discounting, abatement costs, a nd value of life Estimates as they relate to climate change. It makes a case for choosing an appropriate rate of time preference when assess ing climate policies, including both positive and normative considerat ions. Furthermore, the paper argues that the currently estimated dispa rity in the cost of greenhouse gas abatement between developed countri es and developing countries may be inaccurate. Integrating discount ra tes, abatement costs, and value of life estimates highlights important and contrasting implications of international climate policy for deve loping and high-income countries. The context of the paper is the fort hcoming Second Assessment Report of Working Group III of the Intergove rnmental Panel on Climate Change.