Revised Estimate of Social Cost of Carbon Highlights Underestimated Impacts

• Dic 30, 2024 - 15:12

A new study led by the University of California, Davis, suggests that the social cost of carbon (SCC) — a key figure used by policymakers to assess the benefits of climate and energy policies — is significantly too low. The study, published in the Proceedings of the National Academy of Sciences (PNAS), argues that current estimates fail to capture important aspects of how climate change can affect human welfare. When these factors are considered, the SCC increases to over $280 per ton of CO2 emitted in 2020, more than twice the average published in academic research and higher than the U.S. Environmental Protection Agency's estimate of $190 per ton.

Lead author Frances Moore, an associate professor in the Department of Environmental Science and Policy at UC Davis, explains that the concerns people have about climate change—such as its long-term effects on economic growth and the potential loss of irreplaceable natural systems—are not fully reflected in current SCC estimates used for policymaking.

The SCC quantifies the societal and economic damage caused by a ton of carbon dioxide emissions, accounting for impacts like food production, human health, property damage from natural disasters, and harm to ecosystems. This estimate is widely used in policy analysis to assess the benefits of reducing greenhouse gas emissions, with several countries, including the U.S., Germany, and Canada, using official SCC values for policymaking.

The study combines literature evidence and expert surveys to provide a more comprehensive assessment of the SCC. By analyzing 1,800 SCC estimates published over the past 20 years, the authors found a wide range of values, averaging $132 per ton of CO2. An expert survey, however, suggested that the true value of SCC is likely twice as large, due to omissions in the literature, such as the failure to represent climate tipping points and the effects of climate change on rare ecosystems or the long-term economy.

The authors applied machine learning techniques to re-weight the existing literature, accounting for some of the gaps identified by experts. This process, along with the inclusion of more recent evidence, produced a revised 2020 SCC estimate of $283 per ton of CO2, with an interquartile range from $97 to $369.

The study concludes that incorporating climate costs into the prices of economic activities that emit greenhouse gases—whether through carbon pricing or emission regulations—is crucial for preventing the worst outcomes of climate change.

Coauthors of the study include Moritz Drupp (University of Hamburg), James Rising (University of Delaware), Simon Dietz (London School of Economics), Ivan Rudik (Cornell University), and Gernot Wagner (Columbia Business School).

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