Inequality, climate impacts on the future poor, and carbon prices
Hundreds of published papers produce “optimal” trajectories of global emissions of carbon dioxide, and corresponding carbon prices, over this century, taking into account future damages inflicted by climate change. To our knowledge, in all instances the models ignore inequalities in economic variables beyond regional differences. Here, we introduce heterogeneous subregional populations (distributed by income) and explore how the optimal trajectories are affected by whether regional damage afflicts the poor predominantly. We find that when future damage falls especially hard on the poor, considerably greater global mitigation effort is optimal than when damage is proportional to income.