Social Costs of Climate Change Strong Sustainability and Social Costs

Abstract

The possible costs of man-made climate change have become the center of attention of the discussion on the social costs of energy. First estimates have been presented, differing by orders of magnitude. The paper discusses the reasons for these discrepancies and shows that most of them stem from more or less necessary but hidden value judgments. As economics should not predetermine political decisions on strategies to cope with man-made global climate change on the basis of hidden value judgments and as these judgments are a necessary precondition to come up with sensible monetary values for possible damages, the paper suggests to base strategies to cope with global climate change on the fundamental principles of strong sustainability. Such an approach makes it possible to design sound strategies not relying on damage costing and its necessary value judgments. An example is sketched at the end of the paper to show a possible solution to the problem.