Discussion Paper
No. 2013-56 | October 24, 2013
Drew T. Shindell
The Social Cost of Atmospheric Release


The author presents a multi-impact economic valuation framework called the Social Cost of Atmospheric Release (SCAR) that extends the Social Cost of Carbon (SCC) used previously for carbon dioxide (CO2) to a broader range of pollutants and impacts. Values consistently incorporate health and agricultural impacts of air quality along with climate damages. The latter include damages associated with aerosol-induced hydrologic cycle changes that lead to net climate benefits when reducing cooling aerosols. Evaluating a 1% reduction in current global emissions, benefits with a high discount rate are greatest for reductions of sulfur dioxide (SO2), followed by co-emitted products of incomplete combustion (PIC) and then CO2 and methane. With a low discount rate, benefits are greatest for CO2 reductions, and are nearly equal to the total from SO2, PIC and methane. These results suggest that efforts to mitigate atmosphere-related environmental damages should target a broad set of emissions including CO2, methane and aerosols. Illustrative calculations indicate environmental damages are $150-510 billion per year for current US electricity generation (~6-20¢ per kWh for coal, ~2-11¢ for gas) and $0.73±0.34 per gallon of gasoline ($1.20±0.70 per gallon for diesel). These results suggest that total atmosphere-related environmental damages plus generation costs are greater for coal-fired power than other sources, and damages associated with gasoline vehicles exceed those for electric vehicles.

Data Set

JEL Classification:

Q51, Q53, Q54, Q58

Cite As

Drew T. Shindell (2013). The Social Cost of Atmospheric Release. Economics Discussion Papers, No 2013-56, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2013-56

Comments and Questions

Anonymous - Referee report
October 28, 2013 - 08:49
This paper tries to do too much, and does not do anything particularly well. The notion that multiple externalities requires multiple Pigou taxes is well known. It can be found in any textbook in environmental economics. Table 1 is the core result of the paper. There is double-counting. Instead of correcting the DICE model with the latest health impact studies, the author adds things at the margin. The author does not demonstrate that addition at the margin is appropriate (it is only under very particular assumptions). I tried to reconstruct the estimates for black carbon, but failed. The paper talks about BC in a number of places, but never gets specific. The value of a statistical life used is peculiar. Why would it be constant? Why is it so low for the US? How did you make it consistent with the climate impacts? The discount rate is substandard. You can't use a constant money discount rate. You can't have a declining discount rate and uncertainty about the impacts.

Drew Shindell - Reply to Review
October 31, 2013 - 18:53
Comments in pdf

Anonymous - Referee report
December 17, 2013 - 10:02
see attached file

Drew Shindell - Reply to Second Reviewer
January 09, 2014 - 23:16
see attached pdf file

Drew Shindell - Revised manuscript
January 09, 2014 - 23:18
The attached file is a revised version of the paper taking into account the comments of the reviewers, as described in the detailed responses to those comments.