How to address sustainability risk in a dangerous universe

Cost-benefit analysis using discount rates may not be our best option for a sensible intergenerational outcome, writes Kevin R. James

 
While our galaxy is full of planets that could harbour life, there is no evidence that any of them besides our own actually do. This observation suggests that the universe is a dangerous place and that we may be facing civilisational risks that could, in a worst case outcome, result in extinction. Sustainability policy (broadly conceived) deals with these risks. It follows that the goal of sustainability policy is to ensure that we don’t drop the baton of civilisation during our leg of the relay race of human history (Llavador, Roemer, and Silvestre 2015 and Cowen 2018 advocate a similar approach).

Global warming is the paradigmatic example of a sustainability risk, and much of our thinking on how to deal with such risks has emerged from the global warming debate. Yet, reflecting upon how this debate has gone suggests that: i) the cost-benefit analysis (CBA) framework that we now use to discuss sustainability policies has serious flaws; and ii) these flaws distort policy analysis. The flaw in the CBA framework (in this context) is that it combines the question of whether to address a given sustainability risk and the question of how to address that risk into a single analysis. Consequently, factors that affect whether to act have massive—but not necessarily sensible—implications for how to act. A framework that explicitly separates those two questions will therefore lead to better policy analysis and better policies.

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Πηγή: blogs.lse.ac.uk