Climate Risks and Carbon Prices: Revising the Social Cost of Carbon
By F. Ackerman, E. A. Stanton. 2012
307 citations recorded by the source corpus.
Abstract The social cost of carbon – or marginal damage caused by an additional ton of carbon dioxide emissions – has been estimated by a U.S. government working group at $21/tCO2 in 2010. That calculation, however, omits many of the biggest risks associated with climate change, and downplays the impact of current emissions on future generations. Our reanalysis explores the effects of uncertainty about climate sensitivity, the shape of the damage function, and the discount rate. We show that the social cost of carbon is uncertain across a broad range, and could be much higher than $21/tCO2. In our case combining high climate sensitivity, high damages, and a low discount rate, the social cost of carbon could be almost $900/tCO2 in 2010, rising to $1,500/tCO2 in 2050. The most ambitious scenarios for eliminating carbon dioxide emissions as rapidly as technologically feasible (reaching zero or negative net global emissions by the end of this century) require spending up to $150 to $500 per ton of reductions of carbon dioxide emissions by 2050. Using a reasonable set of alternative assumptions, therefore, the damages from a ton of carbon dioxide emissions in 2050 could exceed the cost of reducing emissions at the maximum technically feasible rate. Once this is the case, the exact value of the social cost of carbon loses importance: the clear policy prescription is to reduce emissions as rapidly as possible, and cost-effectiveness analysis offers better insights for climate policy than costbenefit analysis.
Subfields: Economics and Econometrics, Global and Planetary Change, Renewable Energy, Sustainability and the Environment
View Paper: https://www.semanticscholar.org/paper/eaabc6914026a69160e309fb3b0793ac2567307a
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Citations in the corpus
- Quantifying the economic risks of climate change (2017, methodology): “The SLR damage function is calibrated to Anthoff et al. (2006) and the economic and non-economic damage functions are based on Warren (2006), such that all three have an aggregate impact before adaptation of just under 2% of GDP for a temperature rise of 3 °C.(3) The discontinuity impacts are calibr”
- Economic Growth Quality, Environmental Sustainability, and Social Welfare in China - Provincial Assessment Based on Genuine Progress Indicator (GPI) (2019, methodology): “To avoid the problematic multiply counting of the environmental damages, we annualize the present value of total future damages to each year at discount rate 3% (Interagency Working Group, 2010), giving the damage curve from Ackerman and Stanton (2012).”
- A Meta-Analysis of the Total Economic Impact of Climate Change (2022, background): “Ackerman and Stanton (2012), Bosetti et al. (2007), Gunasekera et al. (2008), Manne and Richels (2005), Tol (2013), Weitzman (2012) do not present new estimates of the total impact of climate change, focus instead on the social cost of carbon.”
- The social cost of atmospheric release (2015, background): “Another study [Ackerman and Stanton, 2012] also argues for a higher SCC based on the possibility of higher climate sensitivity and high-damage impacts.”
- Economic Growth, Income Distribution, and Climate Change (2018, unknown): “The damage function of DICE is adapted to account for potentially catastrophic losses at high levels of temperature (Ackerman and Stanton, 2012), = + + Z t T t T t [ ] 1 1 0.00245 [ ] 0.000005021 [ ] . atm atm 2 6.76 Fig.”
- Critical issues for the calculation of the social cost of CO2: why the estimates from PAGE09 are higher than those from PAGE2002 (2013, background): “These findings confirm the importance of the factors identified by Dietz et al. 2007 and Ackerman and Stanton 2011 in determining the SCCO2.”
- Targets for global climate policy: an overview (2013, background): “The following papers are included in the database on the marginal damage costs of carbon dioxide emissions: (Ackerman and Munitz, 2012; Ackerman and Stanton, 2012; Anthoff”
- Young People's Burden: Requirement of Negative CO2 Emissions (2016, unknown): “Furthermore, these examples were not aided by the economy-wide effect of a rising carbon fee or tax (Hsu, 2011; Ackerman and Stanton, 2012; Hansen, 2014), which encourages energy efficiency and carbon-free energies.”