IDEAS home Printed from https://ideas.repec.org/a/taf/tcpoxx/v6y2006i5p565-572.html
   My bibliography  Save this article

The social cost of carbon: what does it actually depend on?

Author

Listed:
  • Chris W. Hope

Abstract

The social cost of carbon (SCC) is the value of the climate change impacts from 1 tonne of carbon emitted today as CO 2 , aggregated over time and discounted back to the present day. We used PAGE2002, the same probabilistic integrated assessment model as used by the Stern Review (Stern et al., 2006), to calculate the SCC and to examine how it varies with discount rate; and find that it is not sensitive to the path of emissions on which the tonne of carbon is superimposed. The mean value of the SCC is $43 per tonne under both a business-as-usual scenario, and under a scenario aimed at stabilizing CO 2 concentrations at 550 ppm. This counter-intuitive result is caused by the interplay between the logarithmic relationship between forcing and concentration, the nonlinear relationship of damage to temperature, and discounting. However, the SCC is sensitive to a number of scientific and economic inputs to the model. Two recent distributions for the sensitivity of climate to a doubling of atmospheric CO 2 (Murphy et al., 2004; Stainforth et al., 2005) increase the mean value of the SCC from $43 to $68 and $90 per tonne. Using a pure rate of time preference of 0.1% per year, as in the Stern Review, gives a mean SCC of $365 per tonne.

Suggested Citation

  • Chris W. Hope, 2006. "The social cost of carbon: what does it actually depend on?," Climate Policy, Taylor & Francis Journals, vol. 6(5), pages 565-572, September.
    • Handle: RePEc:taf:tcpoxx:v:6:y:2006:i:5:p:565-572
    DOI: 10.1080/14693062.2006.9685621
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/14693062.2006.9685621
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/14693062.2006.9685621?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.

    References listed on IDEAS

    as
    1. William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Foley, Duncan K. & Rezai, Armon & Taylor, Lance, 2013. "The social cost of carbon emissions: Seven propositions," Economics Letters, Elsevier, vol. 121(1), pages 90-97.
    2. Dietz, Simon, 2011. "High impact, low probability?: an empirical analysis of risk in the economics of climate change," LSE Research Online Documents on Economics 38586, London School of Economics and Political Science, LSE Library.
    3. Richard S.J. Tol, 2021. "Estimates of the social cost of carbon have not changed over time," Working Paper Series 0821, Department of Economics, University of Sussex Business School.
    4. Duncan Foley & Lance Taylor, 2013. "The Social Cost of Carbon Emissions," SCEPA policy note series. 2013-2, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    5. Richard S. J. Tol, 2021. "Estimates of the social cost of carbon have increased over time," Papers 2105.03656, arXiv.org, revised Aug 2022.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paul Welfens & Jens Perret & Deniz Erdem, 2010. "Global economic sustainability indicator: analysis and policy options for the Copenhagen process," International Economics and Economic Policy, Springer, vol. 7(2), pages 153-185, August.
    2. Eduardo Amaral Haddad & Edson Paulo Domingues & Fernando Salgueiro Perobelli & Eduardo Simões de Almeida & Carlos Roberto Azzoni & Joaquim J. M. & Guilhoto Fabio Kanczuk, 2010. "Impactos Econômicos Das Mudanças Climáticas No Brasil," Anais do XIV Semin·rio sobre a Economia Mineira [Proceedings of the 14th Seminar on the Economy of Minas Gerais], in: Anais do XIV Seminário sobre a Economia Mineira [Proceedings of the 14th Seminar on the Economy of Minas Gerais], Cedeplar, Universidade Federal de Minas Gerais.
    3. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    4. Verónica Cecilia Gutman, 2009. "Climate change and incentives for investment in clean technologies: Can we correct the biggest market failure in history by creating more markets?," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 34(27), pages 11-35, January-j.
    5. Paul Cox & Patricia Wicks, 2011. "Institutional Interest in Corporate Responsibility: Portfolio Evidence and Ethical Explanation," Journal of Business Ethics, Springer, vol. 103(1), pages 143-165, September.
    6. Rick Baker & Andrew Barker & Alan Johnston & Michael Kohlhaas, 2008. "The Stern Review: an assessment of its methodology," Staff Working Papers 0801, Productivity Commission, Government of Australia.
    7. Allan, Grant & Gilmartin, Michelle, 2011. "The regional employment impacts of renewable energy expenditures: The case for modelling," SIRE Discussion Papers 2011-68, Scottish Institute for Research in Economics (SIRE).
    8. Richard S. J. Tol & Seán Lyons, 2008. "Incorporating GHG Emission Costs in the Economic Appraisal of Projects Supported by State Development Agencies," Papers WP247, Economic and Social Research Institute (ESRI).
    9. Karp, Larry S. & Tsur, Yacov, 2007. "Climate Policy When the Distant Future Matters: Catastrophic Events with Hyperbolic Discounting," CUDARE Working Papers 7186, University of California, Berkeley, Department of Agricultural and Resource Economics.
    10. Mertens, Jean-François & Rubinchik, Anna, 2012. "Intergenerational Equity And The Discount Rate For Policy Analysis," Macroeconomic Dynamics, Cambridge University Press, vol. 16(1), pages 61-93, February.
    11. Tol, Richard S. J., 2008. "The Social Cost of Carbon: Trends, Outliers and Catastrophes," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 2, pages 1-22.
    12. Bonilla, Eugenio Diaz, 2008. "Global macroeconomic developments and poverty:," IFPRI discussion papers 766, International Food Policy Research Institute (IFPRI).
    13. Begg, Iain & Bongardt, Annette & Nicolaïdis, Kalypso & Torres, Francisco, 2015. "EMU and sustainable integration," LSE Research Online Documents on Economics 65243, London School of Economics and Political Science, LSE Library.
    14. Brian Roach, "undated". "Policies for Funding a Response to Climate Change," GDAE Working Papers 08-03, GDAE, Tufts University.
    15. Ann van Veestra, 1970. "Establishing Energy Cooperation in Northeast Asia : Implications from the experiences of the European Union," Energy Working Papers 21940, East Asian Bureau of Economic Research.
    16. Christian Josef Bauer & Wolfgang Buchholz, 2008. "How Changing Prudence and Risk Aversion Affect Optimal Saving," CESifo Working Paper Series 2438, CESifo.
    17. Hans-Werner Sinn, 2008. "Public policies against global warming: a supply side approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 360-394, August.
    18. Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2008. "How are preferences revealed?," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1787-1794, August.
    19. Douglas, Niall Edward, 2008. "Modelling the Costs of Climate Change and its Costs of Mitigation: A Scientific Approach," MPRA Paper 13650, University Library of Munich, Germany.
    20. Karp, Larry S. & Tsur, Yacov, 2007. "Discounting And Climate Change Policy," Discussion Papers 7149, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.

    More about this item

    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:taf:tcpoxx:v:6:y:2006:i:5:p:565-572. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/tcpo20 .

    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.