Global Social Cost Research Articles

The forward-looking polluter pays principle for a just climate transition

ABSTRACT Climate justice demands polluters to take responsibility for both present and future harm caused by past GHG emissions and for future harm caused by future GHG emissions. One problem with this is double climate taxation: people living in historical polluting countries must both shoulder the burden of an effective and inclusive climate transition and repay the climate debt incurred by their predecessors. Although double climate taxation might be defensible on normative grounds, it risks making climate justice politically infeasible. I therefore maintain that global climate justice should focus on future, rather than past, climate harms. The forward-looking polluter pays principle (FL-PPP) can ensure both a cost-effective climate transition and a fair distribution of the climate burden, provided it is applied as follows: i) each country must introduce a carbon price calibrated to the global social cost of carbon; ii) each country must transfer part of carbon revenues collected at the country level to an international fund; iii) global carbon revenues must be redistributed on the basis of the country-level social cost of carbon. The FL-PPP burden can be made more progressive, moreover, if the formula for allocating global carbon revenues is adjusted through two coefficients, one consumption-based and one priority-sensitive.

SSP economic growth projections: Major changes of key drivers in integrated assessment modelling

GDP scenarios are major drivers of climate change and climate change mitigation assessment studies. In this paper, a major update of the SSP GDP projections is presented. By using the most recent economic data and short-term projections by the World Bank and International Monetary Fund, the update captures changes in the system of national accounting and purchasing power parities, as well as the impact of the Covid 19 pandemic. Harmonization between the data and the original end-of-the century SSP projections was carried out in terms of GDP per capita in order to preserve the underlying narrative of income convergence. The result is a set of projections compatible with the most recent data and the SSP narratives. A comparison of DICE models calibrated to the original and updated SSP2 GDP per capita projections illustrates how significant the impact of an update of income data on integrated assessment results can be. The estimated global social costs of carbon in 2015 and 2030 rose by almost 30%.

How large is the mitigation potential of natural climate solutions in China?

China is facing a huge challenge in achieving its carbon neutrality goal by 2060 given that it is currently one of the world’s largest greenhouse gas (GHG) emitters and has set a very short timeline for going from peak emissions to carbon neutrality. Natural climate solutions (NCS) that protect, manage, and restore ecosystems have shown substantial potential for increasing carbon sinks or reducing GHG emissions to offset fossil fuel CO2 emissions. This study quantified the mitigation potential of 18 NCS pathways in China at 0.67–1.65 Gigatonne of CO2 equivalent (Gt CO2e) yr−1 averaged from 2020 to 2060, which is even larger than the size of the current national terrestrial carbon sink. Compared with a previous global estimate, our results show a lower mitigation potential in forest ecosystems but a much greater potential for cropland ecosystems in China. From 2020 to 2060, all 18 pathways combined can provide cost-effective mitigation compared to the global social cost of CO2 emission and carbon prices, and 98.6% and 83.3% mitigation potential are cost-effective, respectively. This study further showed that immediate action provides the greatest mitigation. Our estimates highlight the important role of NCS in achieving the national carbon neutrality goal because of their large mitigation potential and cost-effectiveness.

Do improved biomass cookstoves reduce fuelwood consumption and carbon emissions? Evidence from a field experiment in rural Ethiopia

Using a randomized experimental design, real-time electronic stove surface temperature measurements and controlled cooking tests, we estimate fuelwood and CO2 savings from an improved cookstove (ICS) program in rural Ethiopia. Cooking uses a majority of the fuelwood in the country and therefore is a critical determinant of greenhouse gas emissions. Estimating fuelwood savings is therefore a key aspect of crediting ICS climate change benefits. Our findings suggest that the Mirt injera stove saves a substantial amount of fuelwood. Using a relatively low estimate of percentage of nonrenewable biomass, on average one Mirt stove avoids the burning of approximately 634 kg of fuelwood per year and sequesters an additional 0.65 tons of CO2, which is about one-third of previous estimates. The U.S. Interagency Working Group (2013) 2015–2019 estimate for the global social cost of carbon of $44.00 per ton implies annual global benefits from reduced fuelwood burning of $28.60 per stove per year, which substantially exceeds the $12.00 initial cost of the stove. As the global benefit is much greater than the cost, which is borne entirely by Ethiopia, international transfers would be warranted to support expansion of Mirt adoption.

Economy-wide and CO2 impacts of carbon taxes and output-based pricing in New Brunswick, Canada

ABSTRACT Economic models suggest that greenhouse gas emission reductions are warranted on a global scale. However, more analysis is needed at a regional level to inform local governments about the economics of alternative carbon policies. To this end, we develop a dynamic computable general equilibrium model for the case-study province of New Brunswick, Canada, and consider economic impacts and costs of two carbon policy scenarios. The first, called the Federal ‘backstop’, consists of a carbon tax on small emitters and an output-based pricing system (OBPS) on large emitters. The second consists of a common carbon tax across all emitters. We also consider different carbon tax revenue recycling options under each scenario. Results show that when a carbon tax is applied to all emitters starting at $20/tonne in 2019 and increasing to $170/tonne in 2030, cumulative present value GDP would decline in the range of 0.60%–0.63% (depending on revenue recycling options), and emissions will decline by more than 32%. Under the Federal backstop scenario, GDP reduction is only 0.24–0.26%, and emissions reduction is only 13%. In all scenarios, the costs range between $21 and 50/tonne on average, and are generally lower than the global social cost of carbon estimated in other research.

Protecting local water quality has global benefits

Surface water is among Earth’s most important resources. Yet, benefit–cost studies often report that the costs of water quality protection exceed its benefits. One possible reason for this seeming paradox is that often only a narrow range of local water quality benefits are considered. In particular, the climate damages from water pollution have rarely been quantified. Recent advances in global water science allow the computation of the global methane emission from lakes caused by human nutrient enrichment (eutrophication). Here, we estimate the present value of the global social cost of eutrophication-driven methane emissions from lakes between 2015 and 2050 to be $7.5–$81 trillion (2015 $US), and in a case-study for one well-studied lake (Lake Erie) we find the global value of avoiding eutrophication exceeds local values of either beach use or sport fishing by 10-fold.

Repeal of the Clean Power Plan: Social Cost and Distributional Implications

The Clean Power Plan (CPP) was repealed due to concerns about the “unnecessary, costly burdens” it may impose on electric utilities, thereby delaying efforts to reduce carbon dioxide emissions (CO2) from the electricity sector. This paper examines the greenhouse gas and welfare implications of this repeal while incorporating the presence of the state renewable portfolio standards (RPS) in the US as the status quo. We assess the carbon abatement and welfare costs with the CPP relative to two alternative baselines: a no‐policy baseline and a pre‐existing policy baseline with the RPS. The CPP is implemented as a regional mass‐based standard, a regional rate‐based standard, or as a national mass‐based standard with trading of emissions across regions over the 2022–2030 period. We find that the incremental discounted welfare costs per metric ton of CO2 that would have been abated by the CPP relative to the RPS would be substantially lower than the global social cost of CO2. However, the overall costs of carbon abatement with the CPP added to the RPS would have become higher than the social cost of carbon when estimated relative to a no‐policy baseline, except with a national mass‐based CPP. Across all policy combinations and choice of baselines, the aggregate welfare costs were lowest under a national mass‐based standard and highest under the regional rate‐based standard. We also find that the CPP would have imposed large welfare costs on consumers and fossil fuel producers while benefiting the renewable fuel producers.

The energy-climate-health nexus in energy planning: A case study in Brazil

Global greenhouse gas emissions from energy production were approximately 40% higher in 2017 than in 2000 (International Energy Agency, 2018), and ambient particulate matter – one of the byproducts from fossil fuel combustion of most concern for public health – is now the fifth largest contributor to global disease (Cohen et al., 2017). Achieving the climate targets of the Paris Agreement and the Sustainable Development Goals requires better accounting for climate and health costs in energy planning. This paper quantifies trade-offs between selected energy infrastructure, climate, and health costs when meeting future electricity demand by increasing the share of renewable energy, with a focus on variable renewable energy (VRE; here: wind and solar photovoltaic power). Using a spatially and temporally resolved approach, we analyzed three scenarios for year 2030 for Northeast Brazil, characterized by 30%, 45%, and 70% of VRE (the latter corresponds to 100% renewable energy). We find that accounting for the health impacts from electricity generation is sufficient to economically justify deep decarbonization of Northeast Brazil's power sector. Full decarbonization is economically justified when the carbon price exceeds $20/tonne CO2, which is less than Brazil's country-level social cost of carbon and only 4.8% of the global social cost of carbon. Our study shows that regional climate and health costs from electricity generation alone can be greater than the additional infrastructure costs of decarbonization. Our results highlight how systematically accounting for health and climate costs in energy planning would economically justify the decarbonization of energy systems.

Global Social Cost Minimization With Possibly Nonconvex Objective Functions: An Extremum Seeking-Based Approach

A social cost minimization problem is addressed in this article. In the considered problem, a network of agents work collaboratively to minimize the social cost function, which is defined as the sum of the agents’ local objective functions. The engaged agents are supposed to be equipped with an undirected and connected communication graph. Different from most of the existing works, the social cost function in the considered problem is allowed to be nonconvex and possibly admits local extrema. To avoid local extrema and achieve the global minimization of the social cost function, an extremum-seeking-based approach is proposed by introducing a dynamic average consensus protocol to the sinusoidal-dither-signal-based extremum seeking scheme. The dynamic average consensus protocol is leveraged in the proposed extremum-seeker for information sharing and the sinusoidal probing signal is utilized for information extraction. For the avoidance of local extrema, the amplitude of the dither signal is designed to be adaptive. Through Lyapunov stability analysis, it is shown that the proposed method enables the decision variable to converge to a neighborhood of the global minimum point if the conditions on the network connectivity, the existence of unique global minimum and achievability of the global minimum are satisfied. The theoretical result is verified via simulating a numerical example.

A social cost of carbon for (almost) every country

This paper uses imputed national climate change impact functions to estimate national social costs of carbon, which are largest in poor countries with large populations. The national social costs of carbon of faster growing economies are less sensitive to the pure rate of time preference and more sensitive to the rate of risk aversion. The pattern of national social costs of carbon is not sensitive to the assumed impact function, climate sensitivity, and scenario, although the global social cost of carbon is. Income convergence raises the national social costs of carbon of poorer countries, and lowers them for richer countries. Both global and national social costs of carbon are most sensitive to the income elasticity of climate change impacts, a parameter about which we know little.

Including deprivation costs in facility location models for humanitarian relief logistics

Humanitarian assistance is meant to save lives and alleviate human suffering during and in the aftermath of man-made and natural disasters. To prevent and strengthen preparedness for the occurrence of such situations, having available relief supplies in the short-term becomes crucial. The lack of access to life-sustaining items implies a loss in people's welfare, treated as an externality called deprivation costs which must be incorporated into decision-making processes. Since typical humanitarian applications are extensions of commercial logistic models, they usually do not account for externalities, leading to high social costs and likely to unfeasible or suboptimal solutions.This paper develops a facility location model for prepositioning supplies in preparation for disasters; the key feature of this formulation being the fact that it explicitly considers deprivation costs in the objective function. The model attempts to minimize the global social costs, as the sum of both private costs (i.e. costs of transportation, inventory costs and fixed costs of facilities) and deprivation costs, determining the amount per type of product to be prepositioned for serving the areas affected by a disaster during the initial response. The model focuses on those assistance interventions that should be carried out immediately, i.e. within the first 24 h of a humanitarian crisis. We applied the model, using real information, to the Colombian Caribbean region, which was affected by floods in 2010 and 2011. Results demonstrate that deprivation costs represent more than 50% of the total social cost.

The Carbon Abatement Game

Climate change is one of the major global challenges. Mitigating its impact is however bedeviled by free-rider problems and external effects. We thus study the problem of optimal carbon abatement in a dynamic non-cooperative game-theoretical setting involving multiple countries that are open economies. Our framework involves stochastic dynamics for CO2 emissions and economic output of the countries. Each country is represented by a recursive-preference functional. Despite its complexity, the model is analytically tractable. We can explicitly quantify each country's decision on consumption, investment, and abatement expenditures. We also derive closed-form solutions for the country-specific and global social cost of carbon (SCC). One key finding is that both versions of the SCC are increasing in trade volume. This result is robust to adding capital transfers between countries. Our numerical examples suggest that disregarding trade might lead to a significant underestimation of the SCC.

Reducing greenhouse gas emissions and improving air quality: Two global challenges.

There are many good reasons to promote sustainable development and reduce greenhouse gas emissions and other combustion emissions. The air quality in many urban environments is causing many premature deaths because of asthma, cardiovascular disease, chronic obstructive pulmonary disease, lung cancer, and dementia associated with combustion emissions. The global social cost of air pollution is at least $3 trillion/year; particulates, nitrogen oxides and ozone associated with combustion emissions are very costly pollutants. Better air quality in urban environments is one of the reasons for countries to work together to reduce greenhouse gas emissions through the Paris Agreement on Climate Change. There are many potential benefits associated with limiting climate change. In the recent past, the concentrations of greenhouse gases in the atmosphere have been increasing and the number of weather and climate disasters with costs over $1 billion has been increasing. The average global temperature set new record highs in 2014, 2015, and 2016. To reduce greenhouse gas emissions, the transition to electric vehicles and electricity generation using renewable energy must take place in accord with the goals of the Paris Agreement on Climate Change. This work reviews progress and identifies some of the health benefits associated with reducing combustion emissions. © 2017 American Institute of Chemical Engineers Environ Prog, 36: 982–988, 2017

Think Global: International Reciprocity as Justification for a Global Social Cost of Carbon

U.S. climate regulations present a special case of federal agencies applying a global, rather than exclusively domestic, perspective to the costs and benefits in their regulatory impact analyses. Since 2010, federal agencies have emphasized global valuations of climate damages for policies that affect carbon dioxide emissions, using a metric called the “Social Cost of Carbon.” More recently, agencies have also begun to use a global valuation of the “Social Cost of Methane,” for methane emissions. Yet lately, these global metrics have come under attack in courtrooms and academic journals, where opponents have challenged the statutory authority and economic justification for global values. This paper defends a continued focus on the global effects of U.S. climate policy, drawing on legal, strategic, and economic arguments. International reciprocity presents the strongest justification for a global focus. Because the world’s climate is a single interconnected system, the United States benefits greatly when foreign countries consider the global externalities of their greenhouse gas pollution and cut emissions accordingly. Game theory predicts that one viable strategy for the United States to encourage other countries to think globally in setting their climate policies is for the United States to do the same, in a tit-for-tat, lead-by-example, or coalition-building dynamic. In fact, most other countries with climate policies already use a global social cost of carbon or set their carbon taxes or allowances at prices above their domestic-only costs. Additional policy justifications for a global social cost of carbon include the inevitability of significant “spillover” effects and the United States’ willingness to pay to prevent climate damages occurring outside U.S. borders. For all these reasons, a domestic-only social cost of carbon or methane would fail to transparently disclose the true scope of climate-related costs and benefits that matter to U.S. policymakers and the public. As for legal mandates, the United States has already signed and ratified one international treaty that commits it to consider the global climate effects of its domestic actions. Two key statutes for U.S. climate policy—the Clean Air Act and the National Environmental Policy Act—do the same, and it is reasonable for agencies to consider global climate effects under the other statutes most used to date for climate regulation. Finally, legal standards for rational rulemakings may constrain any future attempt to ignore the globally interconnected climate effects of regulatory or deregulatory actions.

Think Global: International Reciprocity as Justification for a Global Social Cost of Carbon

U.S. climate regulations present a special case of federal agencies applying a global, rather than exclusively domestic, perspective to the costs and benefits in their regulatory impact analyses. Since 2010, federal agencies have emphasized global valuations of climate damages for policies that affect carbon dioxide emissions, using a metric called the “Social Cost of Carbon.” More recently, agencies have also begun to use a global valuation of the “Social Cost of Methane,” for methane emissions. Yet lately, these global metrics have come under attack in courtrooms and academic journals, where opponents have challenged the statutory authority and economic justification for global values. This paper defends a continued focus on the global affects of U.S. climate policy, drawing on legal, strategic, and economic arguments.International reciprocity presents the strongest justification for a global focus. Because the world’s climate is a single interconnected system, the United States benefits greatly when foreign countries consider the global externalities of their greenhouse gas pollution and cut emissions accordingly. Game theory predicts that one viable strategy for the United States to encourage other countries to think globally in setting their climate policies is for the United States to do the same, in a tit-for-tat, lead-by-example, or coalition-building dynamic. In fact, most other countries with climate policies already use a global social cost of carbon or set their carbon taxes or allowances at prices above their domestic-only costs. President Obama’s administration has explicitly chosen to adopt a global social cost of carbon to foster continued reciprocity in other countries’ climate policies. Charged by the U.S. Constitution with managing foreign affairs and coordinating executive branch activities, President Obama deserves political and judicial deference on his choice to calculate the global benefits of U.S. climate regulations.As for legal authority, the United States has already signed and ratified one international treaty that commits it to the consideration of global climate effects of its domestic actions. Two key statutes for U.S. climate policy — the Clean Air Act and the National Environmental Policy Act — do the same, and the other statutes most used to date for climate regulation give agencies enough discretion to consider global effects. Executive orders further show that administration priorities for international harmonization should shape U.S. regulatory analysis and decisionmaking. Finally, because of the inevitability of significant “spillover” effects and U.S. willingness to pay to prevent climate damages occurring outside U.S. borders, a domestic-only social cost of carbon or methane would fail to transparently disclose the true scope of climate-related costs and benefits that matter to U.S. policymakers and the public.

Social cost of carbon: Domestic duty

![Figure][1] Cost-effective emissions controls depend on calculating the domestic and global social costs of carbon. PHOTO: © IMAGINECHINA/CORBIS The National Academies of Sciences have assembled a committee to review the economic aspects of climate change in order to better estimate the

Corporate Giants: Some Global Social Costs

Some projections into future of world economy depict an increasing rate of economic concentration, inviting serious thoughts as to its ability to provide for human welfare and to maintain a reasonable degree of diversity and pluralism in world social system. Howard Perlmutter (1969, 1968) advances what he calls 300-Hypothesis, a prediction that global system of future will be dominated by 300 or so giant enterprises. Economist Stephen Hymer (1970) propounds same hypothesis and argues that present trends could produce a regime of 300 or 400 multinational corporations controlling 60 to 70% of world industrial output. And Richard Barber's (1970) recent discussion of concentration in American economy contends that the entire industrialized world will soon be characterized by as high a degree of concentration as now prevails in United States. By 1980, concludes Barber (1970: 264), three hundred corporations will control 75 percent of world's manufacturing assets.'