The ethics of climate change

Placing our prosperity against the risk that climate change will damage the quality of life of our grandchildren requires economists to resolve complex ethical issues. By John Broom

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What should we do about climate change? This is actually an ethical question. Science, including the science of economics, can shed light on the causes of climate change and its consequences. Science is also able to help us find out what can be done about it. But the question "what should we do about it" is an ethical question.

Not all questions about what "should" be done are ethical questions. For example, "How should you hold a golf club?" It is not such a question. But the question of climate change is an ethical question because it pits the conflicting interests of different people against each other. If the world decides to act on the issue, there will be people, especially the more affluent of our generation, who will have to reduce greenhouse gas emissions, in order to save future generations from the existential danger of a warmer world. And when there is a conflict of interest, "should" questions are ethical questions.

Climate change raises several ethical questions. In what way can we, living today, evaluate the well-being of future generations, who will probably be richer than us? Many people, who are alive today and who will be born in the future, will die due to the results of climate change. Is every such death equally bad? How bad are all these deaths together? Many will die before they have time to have children, so climate change will prevent the existence of children who otherwise would have been born. Is their non-existence a bad thing? Are the world's rich, when they emit greenhouse gases, doing an injustice to the world's poor? How should we respond to the danger, albeit small but real, that climate change will lead to a global disaster?

Many ethical questions can be resolved with the help of common sense, and in most cases no sophisticated philosophy is needed. We are all capable, to some extent, of dealing with the ethical questions raised by climate change. For example, almost every one of us recognizes the moral principle according to which in most cases a person should not do something for his own benefit if he thereby harms others. Although sometimes it is difficult to avoid harming another, and sometimes such harm is done by mistake, without realizing it, but even if we hurt someone, we usually compensate him.

Climate change will cause damage. Heat waves, storms and floods will surely cause the death of many people and injury to many others. Tropical diseases, whose distribution will expand as the climate warms, will claim victims. Changes in rainfall patterns will lead to local shortages of food and drinking water. Great migrations of peoples following the rise of the sea level and other natural disasters, will lead to the impoverishment of many. Until now, only a few experts have tried to predict the magnitude of the disaster with exact numbers, but some statisticians dealing with estimates have estimated the expected damage. The heat wave that swept Europe in 2003 resulted in the death of approximately 35,000 people. The floods in China in 1998 severely affected about 240 million people. The World Health Organization (WHO) estimated that already in 2000 the death rate as a result of climate change was more than 150,000 people per year.

In our day-to-day life, each of us causes the emission of greenhouse gases. Driving a car, using electricity, buying products whose production or transportation consumes energy - all these cause the emission of greenhouse gases and contribute to climate change. The things that each of us does for our own personal benefit therefore harm others. It is possible that we cannot do much at the moment, and that in the past we did not imagine that we were doing it, but according to the basic moral principle mentioned earlier, we should try to stop these actions and compensate those whom we hurt.

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This moral principle also states that what we should do about climate change is not just a question of cost versus benefit - although that is certainly an element of the decision. Let's say we consider the benefit we will achieve by partying until the morning with friends and find that it is greater than the suffering we will cause the neighbor to stay up all night. Nevertheless, it does not follow that we have to throw the party. Similarly, one can think of an industrial project that brings benefit in the near term, but involves the emission of greenhouse gases that will harm people decades from now. Even if we assume that the benefit of the project outweighs the damage, there is no certainty that we should carry it out - it is possible that carrying it out is immoral. Those who benefit from the project are not allowed to impose the damage on those who do not benefit from it.

The ethics of cost and benefit

Even if a cost-benefit analysis cannot answer the question of what should be done regarding climate change, it is certainly part of the answer. The cost associated with reducing climate change will be paid by our generation in the concessions it will have to make to reduce the amount of greenhouse gases. We will have to travel less, insulate our homes better, eat less meat and live in less luxury. The benefit is a better quality of life in future generations: they will suffer less from the spread of deserts, from the loss of their homes due to rising sea levels, from floods, hunger and the depletion of natural resources.

Analyzing the benefit that certain people will derive against the cost that will be imposed on others is an ethical matter. But it is possible to quantify a significant part of the costs and profits involved in climate change through economic means. The science of economics provides useful tools for such analysis in complex situations. This is where economics can help ethics.

The ethical basis of cost-benefit economics was recently recognized in a report by Nicholas Stern and his colleagues at the British Treasury. The "Stern Report on the Economics of Climate Change" mainly deals with a cost-benefit analysis and comes to the conclusion that the expected benefit from reducing greenhouse gas emissions is much greater than the cost involved. Stern's work has drawn intense criticism from economists for two main reasons. First, there are economists who believe that economic conclusions should not be based on ethical considerations. Second, the report favors vigorous and immediate action to reduce emissions, while other economic studies, such as that of William Nordhaus of Yale University, claim that the need for action is not so urgent.

These two issues are interrelated. Stern's conclusion differs from that of Nordhaus, mainly because Stern uses, for ethical reasons, a lower "discount rate". When economists estimate the value of future goods at today's prices, they usually discount their face value. The more distant the day when the valued goods will be available, the more their value is deducted. The discount rate is therefore a measure of the rate of reduction in the value of the goods over time [see text box on the next page]. Nordhaus' discount rate is about 6% per year, while Stern's rate is 1.4%. The meaning of the difference is that if we take, for example, goods whose nominal value in a hundred years will be one billion dollars, Stern will estimate their value at today's prices at $247 million, and in contrast Nordhaus will estimate their value today at only $2.5 million. That is, Stern estimates that some cost or benefit in a hundred years is worth almost a hundred times what Nordhaus estimates at today's prices.

The difference between the discount rates of the two economists explains the difference in their conclusions. In order to control climate change, it is necessary to invest the necessary costs already in the near future, that is, to sacrifice part of the current generation's consumption. But the benefit will be produced only in a hundred or two hundred years. Stern attaches to this benefit a higher contemporary value than Nordhaus, and therefore can justify higher investments today to address the problem of climate change than Nordhaus.

The rich future

Why should the value of future goods be deducted? The goods in our context are the products and services that people consume: bicycles, food, banking services, for example. In most climate change scenarios, it is assumed that the world economy will continue to grow. Therefore the people of the future will have on average more goods than the people of today. As a person has more goods, the value of each additional good will be lower, so there is economic logic in deducting the value. For example, if there is a bathroom in the house, this is a real improvement in the standard of living. A second bathroom, on the other hand, is nice, but less life-changing. In economic terms, goods have "diminishing marginal value".

However, it is possible that for purely ethical reasons more should be deducted from the value of the goods of relatively rich people. According to an ethical theory known as prioritarianism, society should value a benefit (that is, an improvement in a person's well-being) produced by a rich person less than it should value the same benefit produced by a poor person. The priority therefore gives priority to the members of the weaker strata. In contrast, another ethical theory, utilitarianism, equally values ​​every benefit, regardless of who produces it. According to the theory of utilitarianism, society should strive for the maximum welfare of all people, without the internal dependence on its distribution in the population.

What is the correct discount rate? What affects the rate of depreciation of future goods? First there are some unethical factors that affect the depreciation rate. One of them is the rate of economic growth, which measures the average well-being of people in the future compared to today. This is therefore a measure of how much benefit people will derive in the future from the addition of certain goods compared to the benefit they derive today from those goods. A high growth rate of the economy results in a high discount rate.

The discount rate also depends on ethical factors. How should we evaluate, compared to us, the benefit that people who will be richer than us will produce in the future? If we take the priority approach, future benefit should be valued less because people will then be richer than us. If, on the other hand, we take the utilitarian approach, utility should be valued equally. Prioritization will therefore result in a higher discount rate than utilitarianism.

The debate between the prioritists and the utilitarians takes an interesting turn in this context. Most of the discussions on the socio-economic gap take place between the relatively rich, when they consider what they have to sacrifice for the relatively poor. But when it comes to people who will live in the future, we consider what we, the relatively poor, have to sacrifice for the future generations, the relatively rich. Prioritization generally demands more sacrifice from developed countries than utilitarianism demands. In the case before us, it actually requires less.

distance in time

There is another ethical consideration that affects the discount rate. There are philosophers who believe that we should care about the people who live close to us in time, more than those who will live in the more distant future, just because of the distance of time from us. If they are right, we should value people's welfare in the future as less, just because they will live in the future. This approach is called "pure discounting". According to this approach, we should attach less importance to the death of a ten-year-old boy in 100 years than to the death of a ten-year-old boy now. On the other hand, an opposite approach claims that we should be influenced by the time of occurrence when we come to evaluate any event. The pure discounting approach therefore supports a relatively high discount rate, while the time-independent approach supports a lower discount rate.

To determine the appropriate discount rate, economists must therefore answer at least two ethical questions: Should we adopt prioritization or utilitarianism? And should we take the pure discount approach or the time-independent approach?

These questions are not questions of basic morality. They raise complicated issues in the philosophy of morality. Moral philosophers approach these questions by combining analytical arguments with sensitivity to ethical intuitions. Arguments in moral philosophy are rarely unequivocal. One reason for this is that we all have different intuitions, which do not always align with each other. All I can do as a philosopher is to judge the truth as best I can and justify the judgment with the best arguments. The brevity of the paper prevents me from presenting my arguments here, but the conclusion I reached is that prioritization is a wrong approach, and that we should adopt the time-independent approach. More details can be found in chapter 10 in the Weighing Goods book from 1991 and paragraph 4.3 in the Weighing Lives book from 2004.

Market discount rates?

Stern reaches the same ethical conclusions that I reached. And since both conclusions lead to a low discount rate, they also lead Stern and his economic model to a 1.4% discount rate. The practical conclusion presented by Stern is that the world must urgently take steps to control climate change.

The economists who oppose Stern do not dispute that his conclusions do indeed derive from his ethical starting point. They oppose his ethical position. But most do not adopt an alternative ethical position of their own, although they prefer a higher discount rate than Stern's. As I explained, the correct discount rate stems from ethical considerations. If so, how can those economists justify a certain discount rate without taking an ethical position?

They do this by using the high discount rate of the money market, a market where people exchange future money for current money and vice versa. Those economists adopt the money market interest rate as their discount rate. Is this step justified?

First, there are values ​​that are determined by people's personal preferences and tastes, and markets simply reveal those preferences and tastes. The relative value of apples and oranges is determined by preferences revealed in the fruit market. But the value to be attached to the well-being of future generations is not determined by personal preference or taste but by ethical judgment.

Does the financial market really express people's ethical judgment regarding the assessment of future well-being? I doubt it. Experience shows that when people borrow and borrow, they often give less weight to their future well-being than to their current well-being. Most of us must be wise enough not to give less weight to our well-being in old age compared to our well-being in young age. However, our behavior reflects our impatience to benefit immediately now, an impatience that overrides any judgment about our future. There is no preventing that short-temperedness will also prevail over moral considerations regarding the well-being of future generations.

For the sake of discussion, let's assume that people's market behavior does faithfully reflect their value judgments. If so, how can economists claim to be unethical and still use the market discount rate? They apparently do it for democratic reasons, they let the public decide the ethical issues and they don't do it themselves. The economists who criticize Stern accuse him of trying to force his ethical beliefs on others.

Those economists are wrong in their understanding of the concept of democracy. Democracy requires discussions and debates and not just free voting. Economists, including Stern, cannot impose their beliefs on anyone. They can only bring recommendations and try to convince them. Determining the correct discount rate requires the use of sophisticated theory, and we, the general public, are unable to do so without the assistance of experts. The role of economists in the democratic process is to develop the theory, to offer their best recommendations supported by the best arguments. They should express a willingness to discuss with each other the ethical foundations underlying their recommendations. Then we will have to decide with the help of the experts. Without their help, our decisions will be unfounded and almost worthless.

Once we have made decisions through the democratic process, the company can act. It is no longer the job of the economists. Their recommendations are the raw material of the process and not its product. The real arrogance is in thinking that you are the final arbiter of the democratic process.

It is impossible to avoid ethical considerations in determining the discount rate. Climate change raises many other ethical questions. We expand on one of them, the problem of disastrous outcomes, in the text box on page 34. Serious ethical work will be required to decide what we must sacrifice to mitigate climate change. Like the science of climate change, the ethics of climate change is also a difficult issue, and the road to a solution is still long. Today we are faced with ethical and scientific problems, and we must invest efforts to solve them.

key concepts

Future generations will have to bear the consequences of climate change. However, if the world economy continues to grow, they will be richer than us.
Our generation must decide, with the advice of expert economists, whether to reduce the future damage considerably, or let our descendants, who will be richer than us, fend for themselves.

Economists cannot avoid deciding on ethical issues when they come to advise on the subject. Even the smallest danger of a future disaster as a result of global warming raises problems that require ethical discussion.

How much do we really care about the future?

When economists value goods that will be received in the future, at today's prices, they usually set a lower value than what we would pay if the goods were received today. How low? If the discount rate is 6% per year, then the billion dollar worth of goods that will be received in a year, has a value of only about 940 million dollars at today's prices (since economists make a continuous deduction, the current value is actually 941.8 billion dollars). Economists Nicholas Stern and William Nordhaus recently reached very different conclusions about how much money should be spent today on goods that will only be available for future generations, because they used different discount rates.

Measure the disaster?

Climate change raises difficult and more important ethical questions than the value of the discount rate. One of them is the risk of a terrible disaster. The Intergovernmental Panel on Climate Change reported several studies that show how the global temperature will rise over time, if greenhouse gases in the atmosphere reach a level that would cause warming equal to that caused by a concentration of about 550 parts per million of carbon dioxide (a level expected within a few decades). Most studies estimate that the probability of a temperature increase of more than 8 degrees Celsius is 5% or even more. This climatic disturbance could lead to the collapse of the human population and perhaps even its extinction, although no one can determine the likelihood of such a scenario. Such an event would be so terrible that even if multiplied by the small chance of its occurrence, it would still be the most important factor in all calculations of the damage caused by climate change. The need to calculate how terrible such an event would be is an urgent ethical need, but also an extremely difficult problem.

A significant reduction of the population, for example, will result in the premature death of billions of people. Therefore, one must appreciate how terrible, from an ethical point of view, the premature death of a person is. This question may sound cruel, but the value of human life has already been recognized as an essential element of public policy. The World Health Organization, for example, developed an index for the "burden of disease" - the damage that a disease causes to people, including the damage done to people who died due to the disease. The World Health Organization already uses the index to assess the damage that will be caused by climate change.

A possible disaster raises an even more difficult ethical question. If all humanity were to become extinct or greatly reduced, many people who were supposed to live, would suddenly cease to exist. The absence of so much human potential seems a most terrible thing. indeed? If the absence of existence is damage, it is actually a damage that is not caused to anyone, since there will be no people left. How can damage be caused that does not harm anyone?

Some philosophers believe that there can be no such harm. They claim that extinction, or reducing the population will not cause any harm, except premature deaths. Other philosophers disagree. They claim that the loss of future humanity will be a terrible and damaging thing. Even if they are right, they will still need to quantify the extent of the damage.

This issue remains one of the most difficult issues in practical philosophy and there are many debates surrounding it. But until a satisfactory answer is found, it will not be possible to fully assess the damage caused by climate change.

About the author

Professor John Broome holds the Waite Chair in Moral Philosophy at the University of Oxford and is a Fellow of Corpus Christi College. He was previously Professor of Economics at the University of Bristol. He is a member of the British Academy, a member of the Royal Society of Edinburgh, a visiting member of the Royal Swedish Academy of Sciences and a recipient of the Laverholm Foundation research grant. In his books: Weighing Goods, Counting the Cost of Global Warming, Ethics out of Economics, Weighing Lives.

The editors' word - who will pay the price of the green revolution

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It is possible that the minds of policy-making politicians and decision-makers in the leading industrialized countries (the G8) have finally penetrated the insight that climate change and global warming are already here, and that practical steps (and not just statements) must be taken to reduce the emission of greenhouse gases into the atmosphere (which mainly originate from mineral fuel incinerator). There is no doubt that the soaring prices of oil in the international markets also contributed to this. The climatic changes, and the actions that will need to be taken to reduce their damage, raise complicated ethical questions, which are dealt with in the article "The Ethics of Climate Change" by John Broom.

Two major tasks are currently assigned mainly to the leading developed countries (the G8) and also to the countries whose economic growth rate is particularly high (such as China and India): (1) to mitigate as much as possible the damages of the climatic changes that have already occurred, and are expected to occur in the foreseeable future. (2) To significantly reduce the emission of greenhouse gases into the atmosphere in order to prevent an ecological disaster, while at the same time not causing serious harm to the world economy. This is the essence of the "green revolution", and like any revolution it will also involve sacrifices. And how unsurprisingly, the victims of climate change will first of all be the weaker sections, and especially the developing countries "in the third world". Both tasks have a heavy economic price and it is the moral and ethical duty of the powerful to bear the price. To illustrate the moral duty, it is enough to mention the "part" of the United States in global warming. Although its share in the world's population is only 4%, it contributes 25% of the total man-made emission of greenhouse gases into the atmosphere. At the last meeting of the G8 leaders held in Japan in July 2008, on the agenda was the commitment to reduce greenhouse gas emissions by 50% by 2050. Even the most extreme greens will be able to sympathize to some extent with the leaders of the powerful countries who had to roll the hot potato in their hands: how to resist in a commitment without significantly harming their economy and the world economy. The formula that everyone was willing to sign was that everyone shares the "vision" of reducing emissions by 50% by 2050. This was a big advance compared to the formula they agreed on in 2007 at their meeting in Germany: "to take seriously" the reduction of emissions by 50%.

Even if there is no doubt that in the future the use of fossil fuels to drive the global economy will be stopped (not only because of greenhouse gas emissions but also because of air pollution with nitrogen oxides and other pollutants), and it will be powered by green energy, this transition will necessarily be gradual and will last for quite some time. It is also impossible to ignore the facts that are already being revealed these days in the ethical field. The leading countries of the G8 are all countries with free economies. In order to prevent crises or at least mitigate their results, results from which the weaker sections of all countries may suffer first of all, government intervention and possibly appropriate legislation will be required. Examples of such phenomena have been experienced recently. The agricultural states of the United States are the main supplier of grain for export. Following the provision of subsidies and concessions, the breeders switched to growing corn to produce ethanol, and this created a shortage of grain for food. This shortage may increase the risk of famine in the poor countries that depend on food supplies from outside.

Another example of ethical problems raised by the green revolution can be found in the article published in the Panorama section (page 9) "Change in the Air" by Emily Harrison. According to the federal "Clean Air Act" starting on December 31, 2008, the use of gaseous compounds of carbon, fluorine and chlorine (CFCs that harm the ear layer) will be prohibited. In the inhalers, the permitted substitutes make the inhalers three times more expensive.

It is therefore necessary to act in a balanced and systematic way: to reduce the damages of the climatic changes and global warming on the one hand, and to reduce the harm to the world economy and especially to its weak communities, on the other hand.