Despite growing scientific evidence that passing a 2°C temperature increase may trigger tipping points in climate dynamics, most Integrated Assessment Models (IAM) based on Cost Benefit Analysis (CBA) with smooth quadratic damage functions are unable to account for the possibility of strong...

In some cost benefit analysis (CBA) applications, as for example valuation of climate change damages, distributional weights are used to account for diminishing utility of marginal income. This is usually done by intratemporal distributional weights, which are combined with discounting to...

The “social cost of carbon” (SCC) is the present value of the future stream of damages from one additional ton of carbon emissions in a particular year. This paper develops a simple model for calculating the SCC and compares estimates of the SCC under certainty and uncertainty. Our model...

The Ramsey rule for the consumption rate of discount assumes a transfer of money of a (representative) agent at one point in time to the same agent at another point in time. Climate policy (implicitly) transfers money not just over time but also between agents. I propose three alternative...

The Ramsey rule for the consumption rate of discount assumes a transfer of money of a (representative) agent at one point in time to the same agent at another point in time. Climate policy (implicitly) transfers money not just over time but also between agents. I propose three alternative...

It has often been stated that current studies aimed at understanding the magnitude of optimal climate policy fail to adequately capture the potential for “catastrophic” impacts of climate change. While economic modeling exercises to date do provide evidence that potential climate...

Drawing upon climate change damage specifications previously proposed in the literature that the authors have calibrated to a common level of damages at 2.5 C, the authors examine the effect upon the social cost of carbon (SCC) of varying damage specifications in a DICE-like integrated...

In 2010, the U.S. government adopted its first consistent estimates of the social cost of carbon (SCC) for government-wide use in regulatory cost-benefit analysis. Here, the authors examine a number of limitations of the estimates identified in the U.S. government report and elsewhere and review...

The social cost of carbon - or marginal damage caused by an additional ton of carbon dioxide emissions - has been estimated by a U.S. government working group at $21/tCO2 in 2010. That calculation, however, omits many of the biggest risks associated with climate change, and downplays the impact...

This report elucidates one aspect of economic IAMs: the damage function. Damage functions map environmental changes (primarily mean temperature increases) to economic impacts. This crucial step in the determination of SCC appears in very different form in the leading economic IAMs. Through...