Valuing Climate Damages Updating Estimation of the Social Cost of Carbon Dioxide (2017) / Chapter Skim
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Summary
Pages 5-20
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From page 5... ...
Many of these damages from CO2 emissions today will affect economic outcomes throughout the next several centuries. Federal agencies are required to use the SC-CO2 to value the CO2 emission reduction benefit of proposed regulations, including emission and fuel economy standards for vehicles; emission standards for industrial manufacturing, power plants, and solid waste incineration; and appliance energy efficiency standards.
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From page 6... ...
CONCLUSION 2-1 For at least some steps in the SC-CO2 estimation framework, using a common module -- rather than averaging the results from multiple models -- can improve transparency and consistency of key assumptions with the peer reviewed science and can improve control over the uncertainty representation, including structural uncertainty. This rationale underlies the Interagency Working Group's use of the same socioeconomic scenarios, discount rates, and distribution for climate sensitivity across IAMs, as well as the committee's sug gestion in its Phase 1 report that the IWG develop or adopt a common climate module.
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From page 7... ...
• Uncertainty characterization: Key uncertainties and sensi tivities, including functional form, parameter assumptions, and data inputs, should be adequately identified and repre sented in each module. Uncertainties that cannot be or have not been quantified should be identified.
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From page 8... ...
Each emissions path would serve as a baseline to which an emission pulse is added in order to estimate the incremental impact of an additional ton of CO2 released in a particular year. Given projected emissions, the climate module would generate estimates of CO2 concentrations in the atmosphere and ocean, surface temperature change, and sea level rise.
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From page 9... ...
. The IWG therefore provided rough estimates of the proportion of global damages attributable directly to impacts within U.S.
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From page 10... ...
• Time horizon: The socioeconomic projections should extend far enough in the future to provide inputs for estimation of the vast majority of discounted climate damages. • Future policies: Projections of emissions of CO2 and other important forcing agents should take account of the likeli hood of future emissions mitigation policies and techno logical developments.
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From page 11... ...
• Develop projections of sectoral and regional GDP and regional population using scenario libraries, published regional or national population projections, detailed-struc ture economic models, SC-IAMs, or other sources. In the longer term, there are many advantages to investing in the construction of a dedicated socioeconomic projection framework designed for the task.
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From page 12... ...
CLIMATE MODULE The purpose of a climate module is to take outputs of the socioeconomic module (particularly emissions of CO2 and other climate forcing agents) and estimate their effect on physical climate variables, such as a time series of temperature change, at the spatial and temporal resolution required by the damages module.
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From page 13... ...
Such a model would reflect current scientific understanding of the relationships between greenhouse gas emissions, concentrations, radiative forcing, and global mean surface temperature change, as well as their uncertainty and profiles over time. RECOMMENDATION 4-1 In the near term, the Interagency Working Group should adopt or develop a climate module that captures the relationships between CO2 emissions, atmospheric CO2 concentrations, and global mean surface temperature change, as well as their uncertainty, and projects their profiles over time.
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From page 14... ...
The committee notes that none of the current SC-IAM climate components fully satisfies the criteria above. Global mean sea level rise is another key physical variable relevant for estimating climate damages.
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From page 15... ...
For example, surface ocean pH can be derived from global mean surface temperature and global cumulative carbon uptake using relationships calibrated to the results of explicit models of carbonate chemistry of the surface ocean. Simple Earth system models produce climate projections that are highly aggregated both spatially and temporally.
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From page 16... ...
The SC-IAMs include damage representations that are either simple and global (e.g., global damages as a function of global mean temperature and gross world product) , or are sectorally and regionally disaggregated (e.g., agricultural damages as a function of regional temperature, precipitation change, CO2 concentrations, and the economic value added or GDP of relevant sectors or regions)
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From page 17... ...
DISCOUNTING MODULE The purpose of a discounting module is to integrate the future stream of monetized damage estimates into a single present value for each state of the world generated by the earlier steps of the SC-CO2 estimation pro
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From page 18... ...
. RECOMMENDATION 6-1 The Interagency Working Group should develop a discounting module that explicitly recognizes the uncertainty surrounding discount rates over long time hori zons, its connection to uncertainty in economic growth, and, in turn, to climate damages.
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From page 19... ...
Due to the atypically long time frame and important intergenerational consequences associated with CO2 emissions, the IWG has used alternative discount rates for the SC-CO2 of 2.5, 3.0, and 5.0 percent. Incorporating estimates of the SC-CO2 in a regulatory impact analysis can present a challenge if the SC-CO2 calculation uses discount rates that are different from those used for other benefits and costs in the analysis (e.g., short-term air quality impacts)
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