Checking the Price Tag on Catastrophe: the Social Cost of Carbon Under Non-linear Climate Response
Year: 2005
Type: preprint
Abstract: Research into the social cost of carbon emissions — the marginal social damage from a ton of emitted carbon — has tended to focus on “best guess” scenarios. Such scenarios generally ignore the potential for low-probability, high-damage events, which are critically important to determining optimal climate policy. This paper uses the FUND integrated assessment model to investigate the influence of three types of non-linear climate responses on the social cost of carbon: the collapse of the thermohaline circulation; the dissociation of oceanic methane hydrates; and climate sensitivities above “best guess” levels. We find that incorporating these impacts can increase the social cost of carbon by a factor of 20. Furthermore, our results suggest that the exclusive focus on thermohaline circulation collapse in the non-linear climate response literature is unwarranted, because other potential non-linear climate responses appear to be significantly more costly.
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
SDG: Climate action
Open Access status: green
OpenAlex ID: W1487524644