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Ecological Theories on Utility - Dictionary of Arguments

Norgaard I 296
Consumption/Utility/Climate Change/Ecological Theories: It is commonly assumed that each individual's utility can be estimated on the basis of their aggregate consumption of goods and services, using a utility function that is common to all of them. The impact of climate change, and of responses to it (i.e. adaptation and mitigation), is measured as a change in this consumption.
Norgaard I 300
Aggregate consumption per capita in empirical studies is simply derived from a future prediction of economic output (i.e. gross domestic product or GDP) per capita, by netting out investment. The impacts of climate change, and responses to it, are then estimated as equivalent changes in consumption, and added to this baseline flow of consumption per capita. Thus every effect of climate change, of adaptation, and of mitigation must be priced. Consumption is transformed into utility by means of a utility function. (…) the marginal utility of consumption diminishes as one becomes richer. The effect of this is to place less (more) weight on the impacts of climate change and response strategies on rich (poor) individuals. Since consumption happens to be distributed unequally across time, space, and states of nature, this is how (…) the utility function affects the social discount rate, risk and inequality aversion. Certainly any approach that takes seriously (i) the consequences of policy choices for (ii) human well‐being can be insightful (Sen 1999)(1).
Vs: (…) the narrowness of the approach also gives rise to some serious concerns, which have been expressed more generally about welfare economics in numerous other settings. Perhaps the most obvious one is that the approach apparently ignores several factors that contribute to human well‐being. In particular, what role do changes in environmental, political and social circumstances play? (…) if they can be estimated as equivalent changes in consumption—monetized—then they can be included in the estimation of utility. (…) the baseline for utility is (…) essentially individual income [and it] does ignore other non‐monetary constituents. Second, it is in practice very difficult to place money values on many of the effects of climate change, and it is well known that the
Norgaard I 301
IAMs [integrated assessment models] used to conduct economic evaluation omit some potentially important changes in environmental, political and social conditions (Watkiss and Downing 2008)(2). Third, the approach does not pay nearly enough attention to the distinction that is suggested to exist between the things that human beings vitally need, and the things that they merely desire (e.g. O'Neill, Holland, et al. 2008)(3).

1. Sen, A. 1999. Development as Freedom. New York: Knopf.
2. Watkiss, P., and Downing, T. E. 2008. The social cost of carbon: Valuation estimates and their use in UK policy. Integrated Assessment 8(1): 85–105.
3. O'Neill, J., Holland, A., et al. 2008. Environmental Values. London: Routledge.

Dietz, Simon: “From Efficiency to Justice: Utility as the Informational Basis for Climate Strategies, and Some Alternatives”, In: John S. Dryzek, Richard B. Norgaard, David Schlosberg (eds.) (2011): The Oxford Handbook of Climate Change and Society. Oxford: Oxford University Press.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Ecological Theories
Norgaard I
Richard Norgaard
John S. Dryzek
The Oxford Handbook of Climate Change and Society Oxford 2011

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