Carbon Prices for the Next Thousand Years

As changes in climate-related stocks have consequences spanning over centuries or possibly millennia to the future, to reconcile the discounting of such far-distant impacts and realism of the shorter-term decisions, hyperbolic time-preferences are considered in a climate-economy model. The results justify high carbon taxes as advocated by Stern while maintaining the realism of the macroeconomic outcome, thus providing a solution for the dilemma centering the carbon tax-discount rate debate.