Valuing International Safety Externalities: Does the "Golden Rule" Apply?

Michael Jones-Lee ()

Journal of Risk and Uncertainty, 2004, vol. 29, issue 3, 277-287

Abstract: How should a developed country quantify the costs and benefits of the safety externalities that its energy and environmental policies generate for a developing country and vice versa? This paper addresses this question within a conventional utilitarian welfare-economics framework on the assumption that citizens of the countries concerned are rational economic agents. Counter to moral intuition, the paper shows that a developed country that displays purely altruistic concern for the wellbeing of citizens of a developing country will not value the safety externalities that it generates for the developing country at the developed country's "high" value of safety, but will instead apply the developing country's own "low" value. In turn, it is shown that even if the developing country displays a corresponding degree of purely altruistic concern for the wellbeing of citizens of the developed country it will nonetheless value the safety externalities that it generates for the developed country at a substantial discount relative to its own "low" value of safety. The paper also explores the implications of other forms of altruistic concern.

Date: 2004
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