Question

In a much-discussed new study (Nature Climate Change, July 2018) titled “Risk of increased food insecurity under stringent global climate change mitigation policy” the co-authors write that a stringent climate change mitigation policy “would have a greater negative impact on global hunger and food consumption than the direct impacts of climate change.”

Their model did not distribute the carbon rents. The co-authors justification for this was that “In most models, carbon tax revenue stays outside of agricultural sectors both on the producer and consumer sides, and is not properly redistributed to affected people.”

Question- How might this common modeling assumption lead to bias in questions about whether climate policy is good for poor folks?

Answer 1

This common modelling assumption is incorrect and biased. This is because a very important aspect of carbon rents is missed here. It does not take into account the damage done to the poor folks as well as the costs incurred by the producers for this damage control.

Thus, such an incomplete study would give biased results.