Journal
JOURNAL OF THE ASSOCIATION OF ENVIRONMENTAL AND RESOURCE ECONOMISTS
Volume 1, Issue 1-2, Pages 273-312Publisher
UNIV CHICAGO PRESS
DOI: 10.1086/676035
Keywords
Climate change; CO2; Externality; Social cost of carbon
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The social cost of carbon (SCC) is an important concept for understanding and implementing climate change policies. This term represents the economic cost caused by an additional ton of carbon dioxide emissions (or more succinctly carbon) or its equivalent. The present study describes the development of the concept, provides examples of its use in current US regulator policies, examines its analytical background, and estimates the SCC using an updated integrated assessment model, the DICE-2013R model. The study estimates that the SCC is $18.6 per ton of CO2 in 2005 US dollars and international prices for the current period (2015). For the central case, the real SCC grows at 3% per year over the period to 2050. The major open issues concerning the SCC continue to be the appropriate discount rate, the potential for catastrophic damages, the impact of incomplete harmonization of abatement policies, and the effects of distortionary taxes.
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