Discussion Paper

No. 2011-43 | October 14, 2011
The Marginal Damage Costs of Different Greenhouse Gases: An Application of FUND
(Published in Special Issue The Social Cost of Carbon)

Abstract

We use FUND 3.5 to estimate the social cost of carbon dioxide, methane, nitrous oxide, and sulphur hexafluoride emissions. We show the results of a range of sensitivity analyses, focusing on the impact of carbon dioxide fertilization. Ignored in previous studies of the social cost of greenhouse gas emissions, carbon dioxide fertilization has a positive effect at the margin, but only for carbon dioxide. Because of this, the ratio of the social cost of a greenhouse gas to that of carbon dioxide (the global damage potential) is higher – that is, previous papers underestimated the importance of reducing non-carbon dioxide greenhouse gas emissions. When leaving out carbon dioxide fertilization, our estimate of the social cost of methane is comparable to previous estimates. Our estimate of the global damage potential of methane is close to the estimates of the global warming potential because discounting roughly cancels carbon dioxide fertilization. Our estimate of the social cost of nitrous oxide is higher than previous estimates, also when omitting carbon dioxide fertilization. This is because, in FUND, vulnerability to climate change falls over time (with development) while in the long run carbon dioxide is a more potent greenhouse gas than nitrous oxide. Our estimate of the global damage potential of nitrous oxide is larger than the global warming potential because of carbon dioxide fertilization, discounting, and rising atmospheric concentrations of both gases. Our estimate of the social cost of sulphur hexafluoride is similar to the one previous estimate. Its global damage potential is higher than the global warming potential because of carbon dioxide fertilization, discounting, and rising concentrations.

Paper submitted to the special issue
The Social Cost of Carbon
 

JEL Classification

Q54

Cite As

Stephanie Waldhoff, David Anthoff, Steven Rose, and Richard S. J. Tol (2011). The Marginal Damage Costs of Different Greenhouse Gases: An Application of FUND. Economics Discussion Papers, No 2011-43, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2011-43

Assessment



Comments and Questions


Anonymous - Referee Report 1
November 07, 2011 - 09:35

See attached file


Anonymous - Referee Report 2
November 17, 2011 - 10:06

See attached file


Robert Kopp - Editor's Report
November 17, 2011 - 10:29

See attached file


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