Monetary valuation of the social cost of CO2 emissions: A critical survey

J. C.J.M. van den Bergh, W. J.W. Botzen*

*Corresponding author for this work

Research output: Other contribution

85 Citations (Scopus)

Abstract

An expanding branch of research has estimated the potential costs of climate change, which are often expressed as the "Social Cost of Carbon" (SCC) or the costs of an additional ton of CO2 emissions. Estimates of the SCC can be used by policy makers to evaluate climate change policies and greenhouse gas emission reduction projects by means of cost-benefit analyses (CBAs). Such analyses are complicated by the wide range of SCC values that have been reported in the literature, and the large uncertainties involved in estimating the potential economic impacts and related costs of climate change. This study presents a critical review of the reported SCC estimates by examining some neglected consequences of climate change, uncertain and extreme scenarios of climate change, the discounting of future climate change effects, the treatment of individual risk aversion, and assumptions about social welfare. In view of the many uncertainties and omissions in conventional cost-benefit analyses of climate impacts and the SCC, alternative approaches to decision-making should be considered for climate policy.

Original languageEnglish
Number of pages14
Volume114
DOIs
Publication statusPublished - 1 Jun 2015

Publication series

NameEcological Economics
PublisherElsevier
ISSN (Print)0921-8009

Keywords

  • Climate change
  • Discounting
  • Risk aversion
  • Social cost of carbon
  • Social welfare
  • Uncertainty

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