Abstract
Abstract 211 estimates of the social cost of carbon are included in a meta-analysis. The results confirm that a lower discount rate implies a higher estimate; and that higher estimates are found in the gray literature. It is also found that there is a downward trend in the economic impact estimates of the climate; that the Stern Review’s estimates of the social cost of carbon is an outlier; and that the right tail of the distribution is fat. There is a fair chance that the annual climate liability exceeds the annual income of many people.
Highlights
Estimates of the social cost of carbon, or the marginal damage cost of climate change are an essential ingredient to any assessment of climate policy
This paper presents an update of an earlier meta-analysis (Tol, 2005) of the social cost of carbon
There is a downward trend in the estimates of the social cost of carbon – even if the Intergovernmental Panel on Climate Change (IPCC) (Schneider et al, 2007) would like to believe the opposite
Summary
Estimates of the social cost of carbon (dioxide emissions), or the marginal damage cost of climate change are an essential ingredient to any assessment of climate policy. The total cost estimates omit some impacts of climate change; they tend to ignore interactions between different impacts, and neglect higher order effects on the economy and population; they rely on extrapolation from a few detailed case studies; they often impose a changing climate on a static society; they use simplistic models of adaptation to climate change; they often ignore uncertainties; and they use controversial valuation methods and benefit transfers. This list of caveats has not changed much since Fankhauser and Tol (1996).
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