1. Mobilizing Political Action on Behalf of Future Generations: The Case of Climate Change Joseph E. Aldy Harvard Kennedy School The Future of Children Workshop Princeton University March 13, 2015

2. Insufficient Effort in Mitigating Climate Change to Date Global emissions increased 40+% since UNFCCC negotiated in 1992 Failure of past presidents to deliver on climate goals (Bush I, Clinton, Obama) MB > MC for mitigating emissions Advocates call for 2C; may now be infeasible

3. Simplifying the Problem Future unborn generations enjoy benefits of climate policy; current generation bears costs What kinds of investments in climate protection should be made? Two opportunity costs to climate investment Foregone alternative investments Foregone current consumption

4. Broad Characterization of Capital Business capital “Incumbents” “Insurgents”  Differ in policy debate engagement Comprehensive, societal capital Business + natural + social +… More closely aligned with “well-being”

5. Policy Implications of Capital Framework Substitution across types of capital possible Investment sustaining aggregate capital stock Returns to investment for a type of capital will increase as the stock of that capital decreases Returns to climate likely higher Weak sustainability

6. Accounting for Future Generations through Benefit-Cost Analysis Climate BCA delivers a public policy investment rule Discount rate crucial in determining weight of future generations in BCA SCC: returns on climate investment Policies in practice deviate from SCC=MC investment rule

7. Special Interests Policy Engagement Insurgent firms push for subsidies for their technologies (incumbents may be ambivalent) Support policies with claims of climate benefits: e.g., biofuels Vintage-differentiated regulation “Baptists and Bootleggers”

8. When Can Future and Current Generations Coincide? Compensation: design of cap-and-trade Compensation: tax reform example Intergenerational agreement: social security and climate protection Make insurgents into incumbents Leveraging current generation’s interests

9. Institutions Political engagement a function of institutions (typically ignored by economists) Long-term, durable policy will need to account for / design institutions Focus of paper has been on domestic political economy: should it consider international coordination and institutional design?