Discussion Paper

No. 2011-16 | June 08, 2011

Robert E. Kopp and Bryan K. Mignone

The U.S. Government’s Social Cost of Carbon Estimates after their First Year: Pathways for Improvement

(Published in The Social Cost of Carbon)

Abstract

In 2010, the U.S. government adopted its first consistent estimates of the social cost of carbon (SCC) for government-wide use in regulatory cost-benefit analysis. Here, we examine a number of the limitations of the estimates identified in the U.S. government report and elsewhere and review recent advances that could pave the way for improvements. We consider in turn socioeconomic scenarios, treatment of physical climate response, damage estimates, ways of incorporating risk aversion, and consistency between SCC estimates and broader climate policy.Paper submitted to the special issue The Social Cost of Carbon

JEL Classification:

Q54, Q58

Cite As

[Please cite the corresponding journal article] Robert E. Kopp and Bryan K. Mignone (2011). The U.S. Government’s Social Cost of Carbon Estimates after their First Year: Pathways for Improvement. Economics Discussion Papers, No 2011-16, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2011-16

Comments and Questions

Gary Yohe, Kevin Arritt, Evan Hazelett, and JinGe Yu - Referee Report 1

January 23, 2012 - 11:01

See attached file

[ Download attached file ]

Robert Kopp - Response to reviewer #1

January 27, 2012 - 03:39 | Author's Homepage

We appreciate the reviewers’ thoughtful comments, and we broadly agree with them. With regard to the question at the end from a less technical reader ("What, they thought, is the point of discussing the results of models that so incompletely incorporate the challenges involved in contemplating how to respond to the climate change problem?") we reiterate a point we make in the conclusion, but which in the revision we will highlight in the introduction as well: "The U.S. government’s social cost of carbon estimates have provided its first consistent framework for incorporating the costs of climate change and the benefits of greenhouse gas abatement into the cost-benefit analysis of federal regulations. They supplanted a family of approaches that varied greatly among rules and agencies and most often neglected the costs of climate change altogether." The key point is that these standard, government-wide SCC values represent a marked improvement upon the previous state of affairs, in which the climate change effects of regulations were values inconsistently and most often at zero dollars.

Anonymous - Referee Report 2

February 15, 2012 - 09:04