Value judgments and the choice of climate protection strategies

Author： Helm Carsten Bruckner Thomas Tóth Ferenc

ISSN： 0306-8293

Source： International Journal of Social Economics, Vol.26, Iss.7-9, 1999-07, pp. : 974-1021

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Abstract

In this paper, we critically review cost-benefit analysis, cost-effectiveness analysis and the guard-rail approach as decision-support tools for the choice of climate protection strategies. Our main focus is on the central role of value judgments, which arise from the need to value; first, uncertain environmental benefits from climate protection relative to other goods; second, the consumption of the present relative to future generations; and third the consumption of "poor" relative to "rich" people. Each of the three approaches analyzed has its shortcomings. Cost-benefit analysis requires a complete and transitive preference ordering, which stands in sharp contrast to scientific uncertainties and valuation problems. Cost-effectiveness analysis suffers from the difficulty of setting an appropriate climate protection target. Finally, the usefulness of the guard-rail approach for decision-makers depends on the extent to which it is possible to limit the choice set.