The greenhouse externality to childbearing: A sensitivity analysis

Externalities to childbearing measure costs or benefits associated with the birth of a child that fall on society but are not considered in the parents' fertility decisions. Externalities are a key part of the theoretical justification for policies that affect fertility behavior. Environmental externalities potentially constitute a significant part of the net externality to childbearing, but few estimates of their magnitude have been made. Here we estimate the 'greenhouse externality' to childbearing resulting from the increased CO2 abatement costs necessitated by an additional birth assuming atmospheric CO2 levels are eventually stabilized, and examine the sensitivity of the results to a number of factors. We find that the greenhouse externality, calculated over the period 1995-2100, is generally negative and in most cases ranges from several hundred to several thousand dollars per birth. These estimates are most sensitive to the discount rate and the institutional arrangements, such as the allowance of emissions trading, according to which reductions are made. They are less sensitive to, although still significantly affected by, the stabilization level, the timing of reductions, future population growth, and the abatement cost function. Estimates of impacts on MDCs and LDCs considered separately demonstrate that the externality can be truly global, in that effects of births in one region can spill over onto the other. In general, negative externalities rival or, in some cases, greatly exceed estimates of the costs of averting births. Investments in fertility-related population policies such as voluntary family planning services and female education are considered desirable in their own right; these results indicate that they can also be considered likely candidates for cost-effective `no-regrets' climate change policy