Measurement of social net benefit of climate stabilization policy

Abstract

To evaluate the social welfare of climate stabilization policy from perspectives of cost–benefit analysis in a optimal economic growth framework based on macroeconomic theory, the purposes of this study are to show theoretically that the equivalent variation is divisible into a public-welfare effect, an income-change effect, and changes in investment in consideration of non-market effects of temperature change on utility. Then each effect of climate stabilization policy must be measured using simulation analysis. Consequently, it is concluded that the framework that this study has adopted is theoretically consistent with traditional cost-benefit framework and can measure each effect of climate stabilization policy.equivalent welfare measure, cost-benefit analysis, climate stabilization policy, macroeconomic model