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International inequity aversion and the social cost of carbon

21st September 2009

Topic(s): Economics, Policy law and regulation, Social cost

This paper defines the rate of inequity aversion, distinguishing between the pure rate and the consumption rate. The social cost of carbon is very sensitive to equity weighting and assumptions about the rate of risk and inequity aversion. Estimates for the consumption rate of inequity aversion for recent data suggest that the equity-weighted social cost of carbon is less than 50% larger than the unweighted estimate.

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International inequity aversion and the social cost of carbon

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