ABSTRACT
NO: There are fundamental problems with cost-benefit analysis when applied to climate change
If the 2014 Report by the Intergovernmental Panel on Climate Change (IPCC) is credible, applying cost-benefit analysis (CBA) to climate change as in calculating the social cost of carbon (SCC) is problematic and potentially dangerous. This essay argues against the possibility of a social cost of carbon by critically examining three fundamental tenets that form the theoretical edifice of CBA in conventional economics: the ideas of scarcity, substitution and discounting. I argue that the application of these tenets to climate change by calculating the social cost of carbon exceeds the legitimate scope of CBA. A brief discussion of an alternative approach to CBA for assessing climate change policies is presented, one which is more applicable to an issue like climate change in which decision-making is urgent, stakes are high, values are in dispute and knowledge is uncertain.
