Rethinking the Social Cost of Carbon Dioxide

This article posits that when it comes to long-lasting greenhouse gases (GHG), the way in which the marginal costs of environmental regulations are calculated, using the standard benefit-cost methodology, should not be used. This is based on the fact that there is a big difference between carbon dioxide and conventional air pollutants. While the health and ecological effects of conventional air pollutants become apparent in a few days and disappear quickly once emissions cease, when carbon dioxide enters the atmosphere, a substantial fraction remains there for centuries and its effects in terms of climate change do not become apparent for decades. Instead of simply using the "social cost of carbon dioxide" (SC-CO₂), a more defensible method would be to refine it, based on identifying and avoiding climate change thresholds, which are temperatures or GHG concentration levels at which damages are likely to become unacceptable. This approach addresses conditions that damage estimates cannot and is advantageous in that the costs involved in achieving different emissions reduction levels are in the marketplace and in metrics that are universally accepted; the costs of emission reductions can be covered through side payments or technology transfers or both; and that the marginal costs may start to fall as the policy progresses.


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  • Accession Number: 01646976
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Sep 27 2017 10:17AM