IDEAS home Printed from https://ideas.repec.org/a/spr/climat/v178y2025i4d10.1007_s10584-025-03917-4.html
   My bibliography  Save this article

Social cost of carbon under endogenous social adaptation

Author

Listed:
  • Huai Deng

    (School of Economics, Lanzhou University)

  • Huan Wu

    (School of Economics, Lanzhou University)

  • Hui Xu

    (School of Economics, Lanzhou University)

Abstract

Adaptation measures are crucial for curbing climate change and will change the assessment of economic damages from climate change. The social cost of carbon (SCC), the expected present value of marginal damage due to additional carbon emissions, is bound to be affected and the related estimates require further identification. We study the SCC under endogenous social adaptation (a combo of households and firm’s adaptation spendings) to provide new view for SCC estimation and to reduce the debates of practicing climate adaptation measures. We construct a DSGE (dynamic stochastic general equilibrium) model with dynamic energy prices under endogenous social adaptation. We found that: (1) Social adaptation will reduce the SCC. Optimal social adaptation is a combination of increased adaptation spending by households and firms with lower ratio of GDP and welfare losses. (2) Low carbon stocks, less convexity of damage function, and increased extraction costs of fossil fuel will reinforce the role of social adaptation. Higher elasticity of adaptive spendings, more climate risks and adaptive spendings all improve the role of social adaptation, leading to lower SCC. Our findings aid in estimating carbon prices and practicing climate adaptation measures.

Suggested Citation

  • Huai Deng & Huan Wu & Hui Xu, 2025. "Social cost of carbon under endogenous social adaptation," Climatic Change, Springer, vol. 178(4), pages 1-20, April.
  • Handle: RePEc:spr:climat:v:178:y:2025:i:4:d:10.1007_s10584-025-03917-4
    DOI: 10.1007/s10584-025-03917-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10584-025-03917-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s10584-025-03917-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Social cost of carbon; Social adaptation; Climate change;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:climat:v:178:y:2025:i:4:d:10.1007_s10584-025-03917-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.