Determining the Social Cost of Carbon: Under Damage and Climate Sensitivity Uncertainty

2019 ◽  
Vol 75 (1) ◽  
pp. 79-103 ◽  
Author(s):  
Samuel Jovan Okullo
2017 ◽  
Vol 08 (02) ◽  
pp. 1750006 ◽  
Author(s):  
KEVIN DAYARATNA ◽  
ROSS McKITRICK ◽  
DAVID KREUTZER

Integrated Assessment Models (IAMs) require parameterization of both economic and climatic processes. The latter includes Equilibrium Climate Sensitivity (ECS), or the temperature response to doubling CO2 levels, and Ocean Heat Uptake (OHU) efficiency. ECS distributions in IAMs have been drawn from climate model runs that lack an empirical basis, and in Monte Carlo experiments may not be constrained to consistent OHU values. Empirical ECS estimates are now available, but have not yet been applied in IAMs. We incorporate a new estimate of the ECS distribution conditioned on observed OHU efficiency into two widely used IAMs. The resulting Social Cost of Carbon (SCC) estimates are much lower than those from models based on simulated ECS parameters. In the DICE model, the average SCC falls by approximately 40–50% depending on the discount rate, while in the FUND model the average SCC falls by over 80%. The span of estimates across discount rates also shrinks substantially.


2021 ◽  
Vol 111 (9) ◽  
pp. 2782-2810
Author(s):  
Ton S. Van den Bremer ◽  
Frederick Van der Ploeg

The social cost of carbon is the expected present value of damages from emitting one ton of carbon today. We use perturbation theory to derive an approximate tractable expression for this cost adjusted for climatic and economic risk. We allow for different aversion to risk and intertemporal fluctuations, skewness and dynamics in the risk distributions of climate sensitivity and the damage ratio, and correlated shocks. We identify prudence, insurance, and exposure effects, reproduce earlier analytical results, and offer analytical insights into numerical results on the effects of economic and damage ratio uncertainty and convex damages on the optimal carbon price. (JEL E12, G22, H23, O44, Q35, Q51, Q54)


2019 ◽  
Vol 25 (1) ◽  
pp. 59-72 ◽  
Author(s):  
Roger M. Cooke ◽  
Alexander Golub ◽  
Bruce Wielicki ◽  
Martin Mlynczak ◽  
David Young ◽  
...  

Author(s):  
Christoph Hambel ◽  
Holger Kraft ◽  
Eduardo Schwartz

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