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The Social Costs of Greenhouse Gas Emissions: An Expected Value Approach

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Author Info
Samuel Fankhauser
Abstract

This paper provides an order-of-rnagnitude assessment of the marginal social costs of greenhouse gas emissions. Re calculations are based on a stochastic greenhouse damage model in which key parameters are random. This allows a closer representation of current scientific understanding and also enables calculation of a damage probability distribution. Thus, we account explicitly for the uncertain nature of the global warming phenomenon. We estimate social costs of CO2 emissions in the order of 20 $/tC for emissions between 1991 and 2000, a value which rises over time to about 28 $/tC in 2021-2030. Similar figures for CH4 and N2O are also provided. As a consequence of the prevailing uncertainty, the standard deviation of the estimates is rather high. The distribution is positively skewed, which implies that the currently predominant method of using best guess values will lead to an underestimation of the expected costs of emissions.

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Publisher Info
Article provided by International Association for Energy Economics in its journal The Energy Journal.

Volume (Year): 15 (1994)
Issue (Month): 2 ()
Pages: 157-184
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Handle: RePEc:aen:journl:1994v15-02-a09

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  15. Richard S. J. Tol & Seán Lyons, 2008. "Incorporating GHG Emission Costs in the Economic Appraisal of Projects Supported by State Development Agencies," Papers WP247, Economic and Social Research Institute (ESRI). [Downloadable!]
  16. Tol, Richard S. J., 2008. "The Social Cost of Carbon: Trends, Outliers and Catastrophes," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 2(25), pages 1-22. [Downloadable!]
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  19. Linda Sygna & Jan Fuglestvedt & H. Aaheim, 2002. "The adequacy of GWPs as indicators of damage costsincurred by global warming," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 7(1), pages 45-62, March. [Downloadable!] (restricted)
  20. Adam Rose & Brandt Stevens, 2001. "An Economic Analysis of Flexible Permit Trading in the Kyoto Protocol," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 1(2), pages 219-242, April. [Downloadable!] (restricted)
  21. S. Fankhauser & R. Tol, 1997. "The social costs of climate change: The IPCC second assessment report and beyond," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 1(4), pages 385-403, December. [Downloadable!] (restricted)
  22. Purnamita Dasgupta & Shikha Gupta, 2008. "Measuring Sustainability with Macroeconomic Data for India," Indian Council for Research on International Economic Relations, New Delhi Working Papers 214, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
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