Cost-Benefit Analysis For Climate Action

Dominique Bureau, Alain Quinet and Katheline Schubert
Additional contact information
Dominique Bureau: MTES

No 2020.03, Policy Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: The European goal of achieving zero-net emissions by 2050 is extremely ambitious. Action must be taken across a broad agenda driven by collective ambition. But it also important to select projects and policy measures in the right economic order to alleviate the burden of the efforts for present generations. Although Cost-Benefit Analysis (CBA) has become the benchmark method to evaluate public policies since a long time, we argue that it should play a bigger role in the design and implementation of climate policies because abatement costs across and within sectors are highly heterogeneous. When applied to decarbonation policies, CBA firstly requires the selection of a shadow price of carbon, to monetize the climate benefits of investments and policies. However, the whole assesment framework must be updated, including the time horizon, the discount rate and the pricing of climate risks. We show that such an updated framework leads to an upwards revision in the assessment of the climate benefits of green public investments and more broadly of mitigation actions. Finally, there is a need to broaden the analysis beyond the efficiency criterion to deal with other dimensions of climate policies, such as their long-term effects on land use, or, above all, their distributive impacts. This requires specific analyses that should be articulated with CBA and carried out early to implement better climate policies than it has been done until now.

Keywords: ACB; Politique climatique (search for similar items in EconPapers)
JEL-codes: Q1 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2020-11
References: View references in EconPapers View complete reference list from CitEc
Citations:

Forthcoming in Non

Downloads: (external link)
http://faere.fr/pub/PolicyPapers/Bureau_Quinet_Schubert_FAERE_PP2020.03.pdf First version, 2020 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fae:ppaper:2020.03

Access Statistics for this paper

More papers in Policy Papers from FAERE - French Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Dorothée Charlier ().