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Social cost of carbon estimates have increased over time

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  • Richard S. J. Tol

    (University of Sussex
    Vrije Universiteit
    Vrije Universiteit
    Tinbergen Institute)

Abstract

Estimates of the social cost of carbon are the yardstick for climate policy targets. However, there is great uncertainty and we do not know how estimates have evolved over time. Here I present a meta-analysis of published estimates showing that the social cost of carbon has increased as knowledge about climate change accumulates. Correcting for inflation and emission year and controlling for the discount rate, kernel density decomposition reveals a non-stationary distribution. In the past 10 years, estimates of the social cost of carbon have increased from US$9 per tCO2 to US$40 per tCO2 for a high discount rate and from US$122 per tCO2 to US$525 per tCO2 for a low discount rate. This trend is statistically significant if sensitivity analyses are discounted and paper quality weighted. Actual carbon prices are below its estimated value almost everywhere and should therefore go up.

Suggested Citation

  • Richard S. J. Tol, 2023. "Social cost of carbon estimates have increased over time," Nature Climate Change, Nature, vol. 13(6), pages 532-536, June.
    • Handle: RePEc:nat:natcli:v:13:y:2023:i:6:d:10.1038_s41558-023-01680-x
    DOI: 10.1038/s41558-023-01680-x
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    References listed on IDEAS

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    2. Tol, Richard S.J., 2024. "A meta-analysis of the total economic impact of climate change," Energy Policy, Elsevier, vol. 185(C).
    3. Alpino, Matteo & Citino, Luca & Zeni, Federica, 2023. "Costs and benefits of the green transitionenvisaged in the Italian NRRP - An evaluation using the social cost of carbon," Energy Policy, Elsevier, vol. 182(C).
    4. Sen, Sweta & Sahoo, Pravakar, 2024. "Carbon pricing for sustainable transition in India," World Development Perspectives, Elsevier, vol. 34(C).
    5. Philip J. Platts & Marije Schaafsma & R. Kerry Turner & Neil D. Burgess & Brendan Fisher & Boniface P. Mbilinyi & Pantaleo K. T. Munishi & Taylor H. Ricketts & Ruth D. Swetnam & Antje Ahrends & Biniam, 2023. "Inequitable Gains and Losses from Conservation in a Global Biodiversity Hotspot," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(3), pages 381-405, November.
    6. Hazem Krichene & Thomas Vogt & Franziska Piontek & Tobias Geiger & Christof Schötz & Christian Otto, 2023. "The social costs of tropical cyclones," Nature Communications, Nature, vol. 14(1), pages 1-13, December.

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