Revisiting the social cost of carbon Nordhaus, William D.
Proceedings of the National Academy of Sciences - PNAS,
02/2017, Volume:
114, Issue:
7
Journal Article
Peer reviewed
Open access
The social cost of carbon (SCC) is a central concept for understanding and implementing climate change policies. This term represents the economic cost caused by an additional ton of carbon dioxide ...emissions or its equivalent. The present study presents updated estimates based on a revised DICE model (Dynamic Integrated model of Climate and the Economy). The study estimates that the SCC is $31 per ton of CO₂ in 2010 US$ for the current period (2015). For the central case, the real SCC grows at 3% per year over the period to 2050. The paper also compares the estimates with those from other sources.
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As scientific and observational evidence on global warming piles up every day, questions of economic policy in this central environmental topic have taken center stage. But as author and prominent ...Yale economist William Nordhaus observes, the issues involved in understanding global warming and slowing its harmful effects are complex and cross disciplinary boundaries. For example, ecologists see global warming as a threat to ecosystems, utilities as a debit to their balance sheets, and farmers as a hazard to their livelihoods.
In this important work, William Nordhaus integrates the entire spectrum of economic and scientific research to weigh the costs of reducing emissions against the benefits of reducing the long-run damages from global warming. The book offers one of the most extensive analyses of the economic and environmental dynamics of greenhouse-gas emissions and climate change and provides the tools to evaluate alternative approaches to slowing global warming. The author emphasizes the need to establish effective mechanisms, such as carbon taxes, to harness markets and harmonize the efforts of different countries. This book not only will shape discussion of one the world's most pressing problems but will provide the rationales and methods for achieving widespread agreement on our next best move in alleviating global warming.
Climate change is profoundly altering our world in ways that pose major risks to human societies and natural systems. We have entered the Climate Casino and are rolling the global-warming dice, warns ...economist William Nordhaus. But there is still time to turn around and walk back out of the casino, and in this essential book the author explains how.
Bringing together all the important issues surrounding the climate debate, Nordhaus describes the science, economics, and politics involved-and the steps necessary to reduce the perils of global warming. Using language accessible to any concerned citizen and taking care to present different points of view fairly, he discusses the problem from start to finish: from the beginning, where warming originates in our personal energy use, to the end, where societies employ regulations or taxes or subsidies to slow the emissions of gases responsible for climate change.
Nordhaus offers a new analysis of why earlier policies, such as the Kyoto Protocol, failed to slow carbon dioxide emissions, how new approaches can succeed, and which policy tools will most effectively reduce emissions. In short, he clarifies a defining problem of our times and lays out the next critical steps for slowing the trajectory of global warming.
The science of global warming has reached a consensus on the high likelihood of substantial warming over the coming century. Nations have taken only limited steps to reduce greenhouse gas emissions ...since the first agreement in Kyoto in 1997, and little progress was made at the Copenhagen meeting in December 2009. The present study examines alternative outcomes for emissions, climate change, and damages under different policy scenarios. It uses an updated version of the regional integrated model of climate and the economy (RICE model). Recent projections suggest that substantial future warming will occur if no abatement policies are implemented. The model also calculates the path of carbon prices necessary to keep the increase in global mean temperature to 2 °C or less in an efficient manner. The carbon price for 2010 associated with that goal is estimated to be $59 per ton (at 2005 prices), compared with an effective global average price today of around $5 per ton. However, it is unlikely that the Copenhagen temperature goal will be attained even if countries meet their ambitious stated objectives under the Copenhagen Accord.
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How much and how fast should we react to the threat of global warming? The "Stern Review" argues that the damages from climate change are large, and that nations should undertake sharp and immediate ...reductions in greenhouse gas emissions. An examination of the Review's radical revision of the economics of climate change finds, however, that it depends decisively on the assumption of a near-zero time discount rate combined with a specific utility function. The Review's unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today's marketplace real interest rates and savings rates.
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6.
Climate Change Nordhaus, William
The American economic review,
06/2019, Volume:
109, Issue:
6
Journal Article
Peer reviewed
This essay addresses the climate-change externality—its sources, its potential impacts, and the policy tools that are available to stem the rising tides and damages that this externality will likely ...bring to humans and the natural world. It draws upon my writings in the area, most of which are cited in the references.
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A pervasive issue in social and environmental research has been how to improve the quality of socioeconomic data in developing countries. Given the shortcomings of standard sources, the present study ...examines luminosity (measures of nighttime lights visible from space) as a proxy for standard measures of output (gross domestic product). We compare output and luminosity at the country level and at the 1° latitude x 1° longitude grid-cell level for the period 1992-2008. We find that luminosity has informational value for countries with low-quality statistical systems, particularly for those countries with no recent population or economic censuses.
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Notwithstanding great progress in scientific and economic understanding of climate change, it has proven difficult to forge international agreements because of free-riding, as seen in the defunct ...Kyoto Protocol. This study examines the club as a model for international climate policy. Based on economic theory and empirical modeling, it finds that without sanctions against non-participants there are no stable coalitions other than those with minimal abatement. By contrast, a regime with small trade penalties on non-participants, a Climate Club, can induce a large stable coalition with high levels of abatement.
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This study extends previous applications of DMSP OLS nighttime lights data to examine the usefulness of newer VIIRS lights in the estimation of economic activity. Focusing on both US states and ...metropolitan statistical areas (MSAs), we found that the VIIRS lights are more useful in predicting cross-sectional GDP than predicting time-series GDP data. This result is similar to previous findings for DMSP OLS nighttime lights. Additionally, the present analysis shows that high-resolution VIIRS lights provide a better prediction for MSA GDP than for state GDP, which suggests that lights may be more closely related to urban sectors than rural sectors. The results also indicate the importance of considering biases that may arise from different aggregations (the modifiable areal unit problems, MAUP) in applications of nighttime lights in understanding socioeconomic phenomenon.
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The linkage between economic activity and geography is obvious: Populations cluster mainly on coasts and rarely on ice sheets. Past studies of the relationships between economic activity and ...geography have been hampered by limited spatial data on economic activity. The present study introduces data on global economic activity, the G-Econ database, which measures economic activity for all large countries, measured at a 1° latitude by 1° longitude scale. The methodologies for the study are described. Three applications of the data are investigated. First, the puzzling "climateoutput reversal" is detected, whereby the relationship between temperature and output is negative when measured on a per capita basis and strongly positive on a per area basis. Second, the database allows better resolution of the impact of geographic attributes on African poverty, finding geography is an important source of income differences relative to high-income regions. Finally, we use the G-Econ data to provide estimates of the economic impact of greenhouse warming, with larger estimates of warming damages than past studies.
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