IDEAS home Printed from https://ideas.repec.org/a/wsi/ccexxx/v08y2017i02ns2010007817500087.html
   My bibliography  Save this article

Estimating The Economic Impact Of The Permafrost Carbon Feedback

Author

Listed:
  • LOUISE KESSLER

    (ESRC Centre for Climate Change Economics and Policy, UK2Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, UK3Department of Geography and Environment, London School of Economics and Political Science, London WC2A 2AE, UK)

Abstract

The permafrost carbon feedback (PCF) is not currently taken into account in economic assessments of climate change, yet it could have important implications for the social cost of carbon (SCC) and the associated choice of the optimal greenhouse gas emission pathway. Although this feedback is still imperfectly known, there are enough estimates of its potential strength to now include it in our assessments. In this paper, I present a model of the PCF and integrate this feedback in the DICE Integrated Assessment Model to examine its consequences. I find that doing so increases the SCC by 10–20% in the baseline scenario, but that this impact is much more significant in the case of a damage function which is more reactive to very high temperature changes, and can reach up to 220%. It follows that setting industrial emission targets without taking into account this feedback would lead to excessive atmospheric carbon: I find that it increases the optimal emission control rate by circa 5% points on average over the period 2015–2110 and that this difference becomes much more significant when the constraint of limiting the increase in global mean temperature to +2∘C or +1.5∘C is added to the model.

Suggested Citation

  • Louise Kessler, 2017. "Estimating The Economic Impact Of The Permafrost Carbon Feedback," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 8(02), pages 1-23, May.
    • Handle: RePEc:wsi:ccexxx:v:08:y:2017:i:02:n:s2010007817500087
    DOI: 10.1142/S2010007817500087
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S2010007817500087
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S2010007817500087?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. Martin L. Weitzman, 2012. "GHG Targets as Insurance Against Catastrophic Climate Damages," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(2), pages 221-244, March.
    2. Richard S.J. Tol, 2011. "The Social Cost of Carbon," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 419-443, October.
    3. Marten, Alex L., 2011. "Transient temperature response modeling in IAMs: The effects of over simplification on the SCC," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 5, pages 1-42.
    4. Raphael Calel & David Stainforth & Simon Dietz, 2015. "Tall tales and fat tails: the science and economics of extreme warming," Climatic Change, Springer, vol. 132(1), pages 127-141, September.
    5. Megan Ceronsky & David Anthoff & Cameron Hepburn & Richard S.J. Tol, 2005. "Checking The Price Tag On Catastrophe: The Social Cost Of Carbon Under Non-Linear Climate Response," Working Papers FNU-87, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2005.
    6. Pycroft, Jonathan & Vergano, Lucia & Hope, Chris & Paci, Daniele & Ciscar, Juan Carlos, 2011. "A tale of tails: Uncertainty and the social cost of carbon dioxide," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 5, pages 1-29.
    7. Detlef Vuuren & Jason Lowe & Elke Stehfest & Laila Gohar & Andries Hof & Chris Hope & Rachel Warren & Malte Meinshausen & Gian-Kasper Plattner, 2011. "How well do integrated assessment models simulate climate change?," Climatic Change, Springer, vol. 104(2), pages 255-285, January.
    8. Robert S. Pindyck, 2013. "Climate Change Policy: What Do the Models Tell Us?," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 860-872, September.
    9. Michael Glotter & Raymond Pierrehumbert & Joshua Elliott & Nathan Matteson & Elisabeth Moyer, 2014. "A simple carbon cycle representation for economic and policy analyses," Climatic Change, Springer, vol. 126(3), pages 319-335, October.
    10. Ackerman, Frank & Stanton, Elizabeth A. & Bueno, Ramón, 2010. "Fat tails, exponents, extreme uncertainty: Simulating catastrophe in DICE," Ecological Economics, Elsevier, vol. 69(8), pages 1657-1665, June.
    11. H. Damon Matthews & Nathan P. Gillett & Peter A. Stott & Kirsten Zickfeld, 2009. "The proportionality of global warming to cumulative carbon emissions," Nature, Nature, vol. 459(7248), pages 829-832, June.
    12. Gail Whiteman & Chris Hope & Peter Wadhams, 2013. "Vast costs of Arctic change," Nature, Nature, vol. 499(7459), pages 401-403, July.
    13. Andries Hof & Chris Hope & Jason Lowe & Michael Mastrandrea & Malte Meinshausen & Detlef Vuuren, 2012. "The benefits of climate change mitigation in integrated assessment models: the role of the carbon cycle and climate component," Climatic Change, Springer, vol. 113(3), pages 897-917, August.
    14. Nicholas Stern, 2013. "The Structure of Economic Modeling of the Potential Impacts of Climate Change: Grafting Gross Underestimation of Risk onto Already Narrow Science Models," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 838-859, September.
    15. E. Schuur & B. Abbott & W. Bowden & V. Brovkin & P. Camill & J. Canadell & J. Chanton & F. Chapin & T. Christensen & P. Ciais & B. Crosby & C. Czimczik & G. Grosse & J. Harden & D. Hayes & G. Hugelius, 2013. "Expert assessment of vulnerability of permafrost carbon to climate change," Climatic Change, Springer, vol. 119(2), pages 359-374, July.
    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. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).
    2. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.t., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," LSE Research Online Documents on Economics 114941, London School of Economics and Political Science, LSE Library.

    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. Louise Kessler, 2015. "Estimating the economic impact of the permafrost carbon feedback," GRI Working Papers 219, Grantham Research Institute on Climate Change and the Environment.
    2. van den Bergh, J.C.J.M. & Botzen, W.J.W., 2015. "Monetary valuation of the social cost of CO2 emissions: A critical survey," Ecological Economics, Elsevier, vol. 114(C), pages 33-46.
    3. Raphael Calel & David Stainforth & Simon Dietz, 2015. "Tall tales and fat tails: the science and economics of extreme warming," Climatic Change, Springer, vol. 132(1), pages 127-141, September.
    4. Dietz, Simon & Gollier, Christian & Kessler, Louise, 2018. "The climate beta," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 258-274.
    5. Pezzey, John C.V. & Burke, Paul J., 2014. "Towards a more inclusive and precautionary indicator of global sustainability," Ecological Economics, Elsevier, vol. 106(C), pages 141-154.
    6. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.t., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," LSE Research Online Documents on Economics 114941, London School of Economics and Political Science, LSE Library.
    7. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).
    8. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    9. Fisher, A. C & Le, P. V, 2014. "Climate Policy: Science, Economics, and Extremes," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6tj3j4jb, Department of Agricultural & Resource Economics, UC Berkeley.
    10. Adam Michael Bauer & Cristian Proistosescu & Gernot Wagner, 2023. "Carbon Dioxide as a Risky Asset," CESifo Working Paper Series 10278, CESifo.
    11. 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.
    12. Simon Dietz & Nicholas Stern, 2014. "Endogenous growth, convexity of damages and climate risk: how Nordhaus� framework supports deep cuts in carbon emissions," GRI Working Papers 159, Grantham Research Institute on Climate Change and the Environment.
    13. Kopp, Robert E. & Mignone, Bryan K., 2012. "The US government's social cost of carbon estimates after their first two years: Pathways for improvement," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-41.
    14. Havranek, Tomas & Irsova, Zuzana & Janda, Karel & Zilberman, David, 2015. "Selective reporting and the social cost of carbon," Energy Economics, Elsevier, vol. 51(C), pages 394-406.
    15. Dietz, Simon & Venmans, Frank, 2019. "Cumulative carbon emissions and economic policy: In search of general principles," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 108-129.
    16. Lamperti, F. & Dosi, G. & Napoletano, M. & Roventini, A. & Sapio, A., 2018. "Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model," Ecological Economics, Elsevier, vol. 150(C), pages 315-339.
    17. Tsigaris, Panagiotis & Wood, Joel, 2019. "The potential impacts of climate change on capital in the 21st century," Ecological Economics, Elsevier, vol. 162(C), pages 74-86.
    18. Nicolas Taconet & Céline Guivarch & Antonin Pottier, 2021. "Social Cost of Carbon Under Stochastic Tipping Points," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 709-737, April.
    19. Loïc Berger & Johannes Emmerling & Massimo Tavoni, 2017. "Managing Catastrophic Climate Risks Under Model Uncertainty Aversion," Post-Print hal-03027150, HAL.
    20. Oliver D. Bettis & Simon Dietz & Nick G. Silver, 2017. "The risk of climate ruin," Climatic Change, Springer, vol. 140(2), pages 109-118, January.

    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:wsi:ccexxx:v:08:y:2017:i:02:n:s2010007817500087. 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: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/cce/cce.shtml .

    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.