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Updating the United States Government's Social Cost of Carbon

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  • Tamma Carleton

    (University of California, Santa Barbara - Bren School of Environmental Science & Management)

  • Michael Greenstone

    (University of Chicago - Department of Economics; NBER)

Abstract

This paper outlines a two-step process to return the United States government’s Social Cost of Carbon (SCC) to the frontier of economics and climate science. The first step is to implement the original 2009-2010 Inter-agency Working Group (IWG) framework using a discount rate of 2%. This can be done immediately and will result in an SCC for 2020 of $125. The second step is to reconvene a new IWG tasked with comprehensively updating the SCC over the course of several months that would involve the integration of multiple recent advances in economics and science. We detail these advances here and provide recommendations on their integration into a new SCC estimation framework.

Suggested Citation

  • Tamma Carleton & Michael Greenstone, 2021. "Updating the United States Government's Social Cost of Carbon," Working Papers 2021-04, Becker Friedman Institute for Research In Economics.
    • Handle: RePEc:bfi:wpaper:2021-04
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    2. Moritz A. Drupp & Frikk Nesje & Robert C. Schmidt, 2022. "Pricing Carbon," CESifo Working Paper Series 9608, CESifo.
    3. Gibney, Garreth & McDermott, Thomas K.J. & Cullinan, John, 2023. "Temperature, morbidity, and behavior in milder climates," Economic Modelling, Elsevier, vol. 118(C).
    4. Zunian Luo, 2022. "Cap or No Cap? What Can Governments Do to Promote EV Sales?," Papers 2212.08137, arXiv.org.
    5. Luis E. GONZALES & ITO Koichiro & Mar REGUANT, 2022. "The Dynamic Impact of Market Integration: Evidence from renewable energy expansion in Chile," Discussion papers 22050, Research Institute of Economy, Trade and Industry (RIETI).
    6. Elinder, Mikael & Hu, Xiao & Liang, Che-Yuan, 2021. "Water conservation and the common pool problem: Can pricing address free-riding in residential hot water consumption?," CERE Working Papers 2021:12, CERE - the Center for Environmental and Resource Economics.
    7. Zhou, Yuwen & Tian, Lixin & Yang, Xiaoguang, 2023. "Schumpeterian endogenous growth model under green innovation and its enculturation effect," Energy Economics, Elsevier, vol. 127(PB).
    8. Rodemeier, Matthias, 2023. "Willingness to Pay for Carbon Mitigation: Field Evidence from the Market for Carbon Offsets," IZA Discussion Papers 15939, Institute of Labor Economics (IZA).
    9. Olivier De Groote & Axel Gautier & Frank Verboven, 2020. "The political economic of financing climate policy : evidence from the solar PV subsidy programs," Working Paper Research 389, National Bank of Belgium.
    10. Jonathan T. Hawkins-Pierot & Katherine R. H. Wagner, 2023. "Technology Lock-In and Costs of Delayed Climate Policy," Working Papers 23-33, Center for Economic Studies, U.S. Census Bureau.
    11. Luis E. Gonzales & Koichiro Ito & Mar Reguant, 2023. "The Investment Effects of Market Integration: Evidence From Renewable Energy Expansion in Chile," Econometrica, Econometric Society, vol. 91(5), pages 1659-1693, September.
    12. Lurdes Jesus Ferreira & Luís Pereira Dias & Jieling Liu, 2022. "Adopting Carbon Pricing Tools at the Local Level: A City Case Study in Portugal," Sustainability, MDPI, vol. 14(3), pages 1-20, February.
    13. Luo, Zunian, 2021. "Cap or no cap? What can governments do to promote EV sales?," MPRA Paper 113566, University Library of Munich, Germany.
    14. Patrick Bigler & Doina Maria Radulescu, 2022. "Environmental, Redistributive and Revenue Effects of Policies Promoting Fuel Efficient and Electric Vehicles," CESifo Working Paper Series 9645, CESifo.
    15. Jon Sampedro & Stephanie Waldhoff & Marcus Sarofim & Rita Dingenen, 2023. "Marginal Damage of Methane Emissions: Ozone Impacts on Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(4), pages 1095-1126, April.
    16. Hansen, Lars Peter, 2022. "Central banking challenges posed by uncertain climate change and natural disasters," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 1-15.
    17. Yanay Farja & Mariusz Maciejczak, 2021. "Economic Implications of Agricultural Land Conversion to Solar Power Production," Energies, MDPI, vol. 14(19), pages 1-15, September.
    18. Braeden Van Deynze & Scott M. Swinton & David A. Hennessy, 2022. "Are glyphosate‐resistant weeds a threat to conservation agriculture? Evidence from tillage practices in soybeans," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 645-672, March.
    19. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.t., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," LSE Research Online Documents on Economics 114941, London School of Economics and Political Science, LSE Library.
    20. Michael Barnett & William Brock & Lars Peter Hansen & Ruimeng Hu & Joseph Huang, 2023. "A Deep Learning Analysis of Climate Change, Innovation, and Uncertainty," Papers 2310.13200, arXiv.org.
    21. Natalie D. Popovich & Deepak Rajagopal & Elif Tasar & Amol Phadke, 2021. "Economic, environmental and grid-resilience benefits of converting diesel trains to battery-electric," Nature Energy, Nature, vol. 6(11), pages 1017-1025, November.
    22. Rennert, Kevin & Prest, Brian C. & Pizer, William & Newell, Richard G. & Anthoff, David & Kingdon, Cora & Rennels, Lisa & Cooke, Roger & Raftery, Adrian E. & Ševčíková, Hana & Errickson, Frank, 2021. "The Social Cost of Carbon: Advances in Long-Term Probabilistic Projections of Population, GDP, Emissions, and Discount Rates," RFF Working Paper Series 21-28, Resources for the Future.
    23. Michael T. Kiley, 2021. "Growth at Risk From Climate Change," Finance and Economics Discussion Series 2021-054, Board of Governors of the Federal Reserve System (U.S.).
    24. Bai, Dongbei & Hu, Jin & Irfan, Muhammad & Hu, Mingjun, 2023. "Unleashing the impact of ecological civilization pilot policies on green technology innovation: Evidence from a novel SC-DID model," Energy Economics, Elsevier, vol. 125(C).
    25. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).

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