New research suggests the "social cost" of carbon could be up to six times higher than the value the U.S. uses to guide its energy regulations.
A recent U.S. government study concluded an additional ton of carbon dioxide emitted in 2015 would cause $37 worth of economic damages based on three popular economic impact models, Stanford University reported. This new research suggests the estimate is a significant understatement.
"We estimate that the social cost of carbon is not $37 per ton, as previously estimated, but $220 per ton," said study coauthor Frances Moore, a PhD candidate in the Emmett Interdisciplinary Program in Environment and Resources in Stanford's School of Earth Sciences.
The findings could influence counties' decisions on their efforts to curb greenhouse gas emissions.
"If the social cost of carbon is higher, many more mitigation measures will pass a cost-benefit analysis," said study co-author Delavane Diaz, a PhD candidate in the Department of Management Science and Engineering at Stanford's School of Engineering. "Because carbon emissions are so harmful to society, even costly means of reducing emissions would be worthwhile."
To make their findings the researchers looked at a computer model used for calculating the economic impacts of climate change called an integrated assessment model (IAM) and factored in recent empirical findings on the economic effects of climate change. The findings suggest climate change could slow economic growth, especially in lower-income countries. IAMS include both include both the costs and benefits of reducing emissions. One limitation of these models is that they cannot account for how the repercussions of climate change will persist through time.
"For 20 years now, the models have assumed that climate change can't affect the basic growth rate of the economy," Moore said. "But a number of new studies suggest this may not be true. If climate change affects not only a country's economic output but also its growth, then that has a permanent effect that accumulates over time, leading to a much higher social cost of carbon."
The team took what is called a Dynamic Integrated Climate-Economy (DICE) model, and modified it in three ways: They allowed climate change to affect the growth rate of the economy; they looked at adaptation to climate change; and they divided the model into two regions to represent high- and low-income countries. The findings suggest climate change-related damages will affect developing countries most dramatically, and its potential effects justify extreme and early mitigation efforts.
"If poor countries become less vulnerable to climate change as they become richer, then delaying some emissions reductions until they are more fully developed may in fact be the best policy," Diaz said. "Our model shows that this is a major uncertainty in mitigation policy, and one not explored much in previous work."
The researchers noted the study because it does not take into account factors such as clean technology and other potential mitigation efforts.
The findings were published in a recent edition of the journal Nature Climate Change.
