Determining the Proper Scope of Climate Change Policy Benefits in U.S. Regulatory Analyses: Domestic versus Global Approaches

Review of Environmental Economics and Policy, Forthcoming (June 2016)

Vanderbilt Law and Economics Research Paper No. 14-20

Vanderbilt Public Law Research Paper No. 16-18

37 Pages Posted: 7 Jun 2014 Last revised: 1 Jun 2016

See all articles by Ted Gayer

Ted Gayer

Brookings Institution

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Date Written: May 31, 2016

Abstract

Although benefit assessment principles are well established for specific populations, very little attention has been paid to how to define the scope of the pertinent population for such assessments. Whose social welfare matters and whose benefits should be included in the assessment? In the case of U.S. regulatory policies, the norm has been to assess the benefits to U.S. citizens. However, in 2010, the Obama Administration’s Interagency Working Group on Social Cost of Carbon adopted a global perspective on assessing the benefits associated with reductions in carbon dioxide emissions. This article examines whether U.S. policymakers should assess the benefits of climate change policies from a domestic or a global perspective. Drawing from executive orders and the laws governing risk and environmental regulations, we review the norms used for the scope of benefit assessments. Then we examine specific examples of the use of the global approach to benefit assessments of carbon dioxide reductions for energy efficiency regulations. We also compare the U.S. approach to that of other developed countries. Finally, we discuss how reciprocity should be incorporated into global benefits within a benefit-cost framework, and the role of altruism in considering the proper scope of benefits.

Keywords: climate change, benefit-cost analysis, willingness to pay

JEL Classification: H43, Q48, K32

Suggested Citation

Gayer, Ted and Viscusi, W. Kip, Determining the Proper Scope of Climate Change Policy Benefits in U.S. Regulatory Analyses: Domestic versus Global Approaches (May 31, 2016). Review of Environmental Economics and Policy, Forthcoming (June 2016); Vanderbilt Law and Economics Research Paper No. 14-20; Vanderbilt Public Law Research Paper No. 16-18. Available at SSRN: https://ssrn.com/abstract=2446522 or http://dx.doi.org/10.2139/ssrn.2446522

Ted Gayer

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vanderbilt University - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

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