What is the cost to society of a ton of carbon dioxide emissions? The U.S. government estimates it at $37, when you account for rising sea levels, loss of farm productivity, and other impacts of climate change. But some researchers reckon that number is too low. Much too low.
A new paper from Frances Moore and Delavane Diaz, PhD candidates at Stanford University, instead estimates the social cost of carbon at $220 a ton–a number that, if accepted officially, would have huge implications for climate policy. For example, it would improve the case for subsidizing renewable energy over fossil fuels, because the cost of not doing so would be that much higher over the longer term.
“The social cost of carbon gives the economic value of the damages associated with emitting an additional ton of CO2,” Moore explains in an email. “With a higher value of the social cost of carbon, more expensive mitigation measures will pass a cost-benefit test and would be considered worthwhile.”
Moore and Diaz’s numbers are higher because, unlike the government, they think climate change will affect economic growth in the future. “The models used for the previous estimates assumed that climate change could affect economic output but not the underlying growth rate of the economy,” Moore says. “If climate change affects economic growth rates, then damages can be really large since they accumulate over time.”
Several recent studies have found that hotter and more extreme weather (cyclones, for example) affects growth rates in poorer countries. Therefore, Moore and Diaz think it only right to account for that in social cost modeling.
The paper, which is published in the journal Nature Climate Change, doesn’t account for the cost of mitigting climate change itself on economic growth–a big caveat. But then it’s not the first study to make the same point. A report from the Natural Resources Defense Council, the Environmental Defense Fund, and a group at New York University’s School of Law, argued similarly last year, though it didn’t put a number of what the cost should be.