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As climate changes and natural disasters intensify, the threat of
human displacement increases. This paper studies carbon taxation
in the presence of international climate displacement. After
providing evidence on the migration response to disasters,
forced climate migration is introduced into a quantitative climatemacroeconomic
model to theoretically characterize the global and
local social costs of carbon—SCCs, equivalently, optimal carbon
taxes. These change substantially when this type of migration is
considered. A North-South calibration reveals that, while migration
increases the local SCC in host regions—more so if political
conflict is considered—the origin region and global SCCs are not
much affected.
