Value judgments and the choice of climate protection strategies

In this paper, we critically review cost‐benefit analysis, cost‐effectiveness analysis and the guard‐rail approach as decision‐support tools for the choice of climate protection strategies. Our main focus is on the central role of value judgments, which arise from the need to value; first, uncertain environmental benefits from climate protection relative to other goods; second, the consumption of the present relative to future generations; and third the consumption of “poor” relative to “rich” people. Each of the three approaches analyzed has its shortcomings. Cost‐benefit analysis requires a complete and transitive preference ordering, which stands in sharp contrast to scientific uncertainties and valuation problems. Cost‐effectiveness analysis suffers from the difficulty of setting an appropriate climate protection target. Finally, the usefulness of the guard‐rail approach for decision‐makers depends on the extent to which it is possible to limit the choice set.