> I used a 2% real rate of return and assumed the human race stabilized
> at 6 billion and the value of a human life stayed at 10 million real
> dollars.
The value of a human life is infinite and yet people go to the cinema
or buy themselves pretty wallpaper rather than give the money to save
lives.
For some people their own life isn't precious enough to bother wearing
a seatbelt.
AFAIK is the 10 million Dollar (or something close) the cut-off for
road (or railway I forget which one, the latter is higher) safety
measures.
In truth the 10 million aren't about what should be spent or value,
they are mostly descriptive. That's how much we are in fact spending,
or rather what OECD governments are willing to spend to prevent one
particular type of death in their own countries.
The optimal carbon tax calculated by Nordhaus is based on a host of
implicit assumptions about the future, but also about who it should be
optimised for.
Specifically, I think it's assumed that the optimisation should be for
humanity.
I don't think that's the way the world works today; mostly national
governments care hundreds to millions of times more about their own
nationals than about people in the rest of the world.
Why does Nordhaus' assumption work in practise nevertheless?
I think the answer is guilt/fault.
Personally I find that a pity, because I think that the reference
frame for optimisation should really be humanity rather than the
nation, so merely the fact that it's not our fault that there are few
schools in India shouldn't prevent us from investing heavily in them.
If you take Nordhaus's other assumptions at face value, I think it's
pretty clear that in addition to a small and rising carbon tax we'd
institute huge wealth transfers to poorer nations, and I'd guess that
this would double or triple overall GDP compared to business as usual,
while the carbon tax is about a few tenths of a percentage point.
Whether Nordhaus is right that GDP can go up by a factor ten over 100
years in spite of climate change, ecosystem collapse and resource
depletion is another matter. When the starting point of the discussion
is that without addressing climate change, no other problems can be
addressed effectively, it's obvious that climate change has to be the
top priority beyond all others.
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