VALUING CLIMATE DAMAGES
Updating Estimation of the
Social Cost of Carbon Dioxide
Committee on Assessing Approaches to
Updating the Social Cost of Carbon
Board on Environmental Change and Society
Division of Behavioral and Social Sciences and Education
A Report of
THE NATIONAL ACADEMIES PRESS
Washington, DC
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This activity was supported by Contract/Grant No. DE-PI0000010, task DE-DT0009404 between the National Academy of Sciences and the Department of Energy. Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization or agency that provided support for the project.
International Standard Book Number-13: 978-0-309-45420-9
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Digital Object Identifier: https://doi.org/10.17226/24651
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Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2017. Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide. Washington, DC: The National Academies Press. doi: https://doi.org/10.17226/24651.
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COMMITTEE ON ASSESSING APPROACHES TO UPDATING THE SOCIAL COST OF CARBON
MAUREEN L. CROPPER (Cochair), Department of Economics, University of Maryland
RICHARD G. NEWELL (Cochair), Resources for the Future, Washington, DC
MYLES R. ALLEN, Environmental Change Institute, School of Geography, and the Environment and Department of Physics, University of Oxford, United Kingdom
MAXIMILIAN AUFFHAMMER, Department of Agricultural & Resource Economics, University of California, Berkeley
CHRIS E. FOREST, Departments of Meteorology and Atmospheric Science & Geosciences, Earth and Environmental Systems Institute, Pennsylvania State University
INEZ Y. FUNG, Department of Earth & Planetary Science and Department of Environmental Science, Policy and Management, University of California, Berkeley
JAMES K. HAMMITT, Department of Health Policy and Management, T.H. Chan School of Public Health, Harvard University
HENRY D. JACOBY, Sloan School of Management (emeritus), Massachusetts Institute of Technology
ROBERT E. KOPP, Rutgers Energy Institute and Department of Earth and Planetary Sciences, Rutgers University
WILLIAM PIZER, Sanford School of Public Policy, Duke University, North Carolina
STEVEN K. ROSE, Energy and Environmental Analysis Research Group, Electric Power Research Institute, Washington, DC
RICHARD SCHMALENSEE, Sloan School of Management (emeritus), Massachusetts Institute of Technology
JOHN P. WEYANT, Department of Management Science and Engineering, Stanford University
JENNIFER HEIMBERG, Study Director
CASEY J. WICHMAN, Technical Consultant, Resources for the Future, Washington, DC
MARY GHITELMAN, Senior Program Assistant
BOARD ON ENVIRONMENTAL CHANGE AND SOCIETY 2016-2017
RICHARD H. MOSS (Chair), Senior Research Scientist, Joint Global Change Research Institute, College Park, Maryland
JOSEPH ARVAI, Max McGraw Professor of Sustainable Enterprise, School of Natural Resources and Environment, Ross School of Business, University of Michigan
ANTHONY J. BEBBINGTON, Higgins Professor of Environment and Society and Graduate School of Geography, Clark University
WILLIAM U. CHANDLER, Transition Energy, Annapolis, Maryland
F. STUART CHAPIN, III, Institute of Arctic Biology, University of Alaska–Fairbanks
RUTH DEFRIES, Department of Ecology, Evolution, and Environmental Biology, Columbia University
HALLIE C. EAKIN, School of Sustainability, Arizona State University
RICHARD G. NEWELL, Resources for the Future, Washington, DC
JONATHAN OVERPECK, Institute of the Environment, University of Arizona
STEPHEN POLASKY, Department of Applied Economics, University of Minnesota
J. TIMMONS ROBERTS, Institute at Brown for Environment and Society, Brown University
MAXINE L. SAVITZ, Technology Partnerships, Honeywell, Inc. (retired)
ROBYN S. WILSON, School of Environment and Natural Resources, Ohio State University
MARY ELLEN O’CONNELL, Interim Board Director (to November 2016)
TOBY WARDEN, Interim Board Director (since November 2016)
Acknowledgments
A number of individuals and organizations contributed to the successful completion of this report. We wish to thank the Interagency Working Group for the Social Cost of Greenhouse Gases for initiating this study and for the study’s sponsor, the U.S. Department of Energy, for supporting our work.
Casey Wichman, Resources for the Future, was the study’s technical consultant. We wish to thank Casey for the many contributions he made to both Phase 1 and this final report and throughout the course of the study. Casey’s expertise and attention to detail improved the quality of both reports.
Over the course of the study, committee members benefited from discussion and presentations by the many individuals who participated in the committee’s information-gathering meetings. Appendix B provides a full listing.
Several individuals contributed to the report through commissioned research. We wish to thank Delavane Diaz, Electric Power Research Institute (EPRI), and Frances Moore, Department of Environmental Science and Policy at University of California, Davis, for performing a literature review of climate impacts and damages that was important for Chapter 5. We also wish to thank Bentley Coffey, Sanford School of Public Policy, Duke University, for conducting forecasting studies on long-term growth rates that are described in Appendix D and contributed to Chapter 3. We would also like to thank and recognize Scott Doney, Marine Chemistry and Geochemistry, Woods Hole Oceanographic Institution, for his review of the analysis and calculations used in Chapter 4 and Appendix F.
Thanks are also due to the National Academies of Sciences, Engineering, and Medicine project staff and staff of the Division of Behavioral and Social Sciences and Education (DBASSE). Jennifer (Jenny) Heimberg directed the study and played a key role in project management, report drafting, and the review process. Mary Ghitelman managed the study’s logistical and administrative needs, making sure meetings ran efficiently and smoothly. Kirsten Sampson-Snyder guided the report through the National Academies review process, and Eugenia Grohman provided editorial direction. Toby Warden, interim director of the Board on Environmental Change and Society (after November 2016), assisted with the report release, and Jenell Walsh-Thomas, Christine Mirzayan Science and Technology Fellow, stepped in to support final report production activities. Finally, Mary Ellen O’Connell, executive director of DBASSE and interim director of the Board on Environmental Change and Society (through November 2016), helped us from the study’s initiation to its completion; we are thankful for her guidance throughout.
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process.
We thank the following individuals for their participation in the review of this report: Hadi Dowlatabadi, Institute for Resources Environment and Sustainability, University of British Columbia; James (Jae) Edmonds, Joint Global Change Research Institute, Pacific Northwest National Laboratory; Karen Fisher-Vanden, Environmental and Resource Economics, The Pennsylvania State University; Michael Greenstone, Energy Policy Institute at Chicago and Department of Economics, University of Chicago; Anthony C. Janetos, The Frederick S. Pardee Center for the Study of the Longer-Range Future, Boston University; Peter B. Kelemen, Department of Earth and Environmental Sciences, Columbia University, and Lamont-Doherty Earth Observatory; Bryan K. Mignone, Corporate Strategic Research, ExxonMobil Research and Engineering Company; Richard H. Moss, Joint Global Change Research Institute, University of Maryland; Elisabeth Moyer, Department of Geophysical Sciences, University of Chicago; Richard L. Revesz, New York University School of Law; David A. Weisbach, Law School and Computation Institute, University of Chicago, and Argonne National Laboratories; Jonathan B. Wiener, Law, Environmental Policy, and Public Policy Law School, Nicholas School of the Environment, and Sanford School of Public Policy, Duke University;
and Gary W. Yohe, Economics and Environmental Studies, Wesleyan University.
Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions nor did they see the final draft of the report before its release. The review of this report was overseen by Elisabeth M. Drake, Energy Laboratory emerita, Massachusetts Institute of Technology, and Charles F. Manski, Department of Economics, Northwestern University, who were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.
Finally, the dedication, collegiality, and hard work of the committee are especially appreciated. We recognize that the committee members have demanding positions outside of this study. We thank them for their time and commitment to this report.
Maureen L. Cropper, Cochair
Richard G. Newell, Cochair
Contents
An Integrated Modular Approach
History and Development of the Social Cost of Carbon for Regulatory Impact Analysis
Summary of the IWG’s Approach to Estimating the Social Cost of Carbon
Updating Estimates of the Social Cost of Carbon
Summary of the Study’s Phase 1 Report
Strategy to Address the Study Charge
2 Framework for Estimating the Social Cost of Carbon
Structure of the Estimation Process
An Integrated, Modular Framework
Expert Judgment in SC-CO2 Estimation
Process of Updating the Estimates
Developing a Socioeconomic Module in the Near Term
A Longer-Term Strategy and Agenda for Research and Development
Characteristics of an Adequate Climate Model
Benchmark Experiments for Calibrating and Evaluating Simple Earth System Models
An Illustrative Simple Earth System Model: Overview
Projecting Ocean Acidification
Spatial and Temporal Disaggregation
Limitations of Simple Earth Model Systems
Current Implementation of the Damage Components in SC-IAMs
Current Literature on Climate Damages
Near-Term Improvements in SC-CO2 Damage Estimation
A Damage Module for the Longer Term
Importance of Discount Rate Assumption for the SC-CO2 Estimates
Approaches to Discounting and Their Applications
Linking Uncertainty in Discount Rates and Uncertainty in Economic Growth
Parameterization of a Ramsey-Like Approach for SC-CO2 Discounting
Acronyms
AMOC |
Atlantic meridional overturning circulation |
AR5 |
IPCC’s Fifth Assessment Report |
CDF |
cumulative distribution function |
CGE |
computable general equilibrium |
CH4 |
methane |
CMIP |
Coupled Model Intercomparison Project |
CMIP5 |
Coupled Model Intercomparison Project, Phase 5 |
CO2 |
carbon dioxide |
CO2SYS.m |
carbon systems calculation code |
DIC |
dissolved inorganic carbon |
DICE |
Dynamic Integrated Climate-Economy (model) |
ECP |
extended concentration pathway |
ECS |
equilibrium climate sensitivity |
EMF-22 |
Energy Modeling Forum’s 22nd study |
EPPA |
emissions prediction and policy analysis |
ESMs |
Earth system models |
FAIR |
finite amplitude impulse response |
FUND |
Framework for Uncertainty, Negotiation and Distribution (model) |
GCAM |
Global Change Assessment Model |
GDP |
gross domestic product |
GHGs |
greenhouse gas |
GLODAP2 |
Global Data Analysis Project, 2 |
GMSL |
global mean sea level |
GNI |
gross national income |
Gt C |
gigaton, or 1 billion tons, of carbon |
Gt CO2 |
gigaton of carbon dioxide |
GWP |
gross world product |
IAMs |
integrated assessment models |
IIASA |
International Institute for Applied Systems Analysis |
IPCC |
Intergovernmental Panel on Climate Change |
IPT |
initial pulse adjustment timescale |
IWG |
Interagency Working Group on the Social Cost of Carbon (through July 2016); Interagency Working Group on the Social Cost Greenhouse Gases (beginning August 2016) |
kg/m3 |
kilogram per cubic meter |
MERGE |
model for estimating the regional and global effects of greenhouse gas reductions |
microeq/kg |
microequivalents per kilogram |
micromol/kg |
micromoles per kilogram |
micromol/PgCO2 |
micromole per petagram of carbon dioxide |
MW |
Mueller-Watson |
N2O |
nitrous oxide |
NPV |
net present value |
OECD |
Organisation for Economic Co-operation and Development |
OMB |
U.S. Office of Management and Budget |
PAGE |
Policy Analysis of the Greenhouse Effect (model) |
PAGE09 |
2009 version of PAGE |
pCO2 |
atmospheric carbon dioxide |
POLES |
Prospective Outlook on Long-term Energy Systems |
ppm |
parts per million |
PSU |
practical salinity unit |
RCPs |
representative concentration pathways |
RCP 2.6, 4.5, 8.5, 6.0 |
versions of representative concentration pathways |
RIAs |
federal regulatory impact analyses |
RICE |
Regional Integrated Climate-Economy (model) |
RWF |
realized warming fraction (acronym used prior to 2016) |
SCC |
social cost of carbon (acronym used prior to 2016) |
SC-CO2 |
social cost of carbon dioxide |
SC-IAM |
social cost of carbon IAMs |
SCMs |
simple climate models |
SESMs |
simple Earth system models |
SIR |
static impulse response |
SLR |
sea level rise |
TCR |
transient climate response |
TCRE |
transient climate response to emissions |
W/m2 |
watts per square meter |
WITCH |
World Induced Technical Change Hybrid Model |