Discounting and Mortality Valuation Interaction Can Cause Infinite Valuation of Future Lives

Per the National Academy of Sciences’ 2017 recommendations, the social cost of carbon (SCC) is now calculated with a modular framework in which researchers can easily substitute different models for estimating climate damages. The modular approach is an improvement from previous practice, but great care must be taken to ensure that assumptions made in each of the modules are mutually compatible. Here, we show that following the standard practice in mortality valuation and Ramsey discounting, combined with using some of the latest temperature-related mortality damage functions, will cause the model to place infinite value on a single future life. This falsely suggests that climate change causes infinite damage and that climate change is unanalyzable by benefit-cost analysis, in line with the Dismal Theorem. However, this finding, in this case, is merely due to internally incompatible monetization choices. We suspect that multiple models have this issue, but we discuss it here in the context of the GIVE model because it is open-source and easily accessible. Fortunately, this issue is straightforward to address and we discuss several options.