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The ultimate cost of carbon

Author

Listed:
  • David Archer

    (University of Chicago)

  • Edwin Kite

    (University of Chicago)

  • Greg Lusk

    (University of Chicago
    Michigan State University)

Abstract

We estimate the potential ultimate cost of fossil-fuel carbon to a long-lived human population over a one million–year time scale. We assume that this hypothetical population is technologically stationary and agriculturally based, and estimate climate impacts as fractional decreases in economic activity, potentially amplified by a human population response to a diminished human carrying capacity. Monetary costs are converted to units of present-day dollars by multiplying the future damage fractions by the present-day global world production, and integrated through time with no loss due from time-preference discounting. Ultimate costs of C range from $10k to $750k per ton for various assumptions about the magnitude and longevity of economic impacts, with a best-estimate value of about $100k per ton of C. Most of the uncertainty arises from the economic parameters of the model and, among the geophysical parameters, from the climate sensitivity. We argue that the ultimate cost of carbon is a first approximation of our potential culpability to future generations for our fossil energy use, expressed in units that are relevant to us.

Suggested Citation

  • David Archer & Edwin Kite & Greg Lusk, 2020. "The ultimate cost of carbon," Climatic Change, Springer, vol. 162(4), pages 2069-2086, October.
    • Handle: RePEc:spr:climat:v:162:y:2020:i:4:d:10.1007_s10584-020-02785-4
    DOI: 10.1007/s10584-020-02785-4
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    References listed on IDEAS

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    Cited by:

    1. Pavel Tcvetkov, 2021. "Climate Policy Imbalance in the Energy Sector: Time to Focus on the Value of CO 2 Utilization," Energies, MDPI, vol. 14(2), pages 1-22, January.

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