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A Method for Deriving Stated Preference Estimates of the Average Social Cost of Carbon

Author

Listed:
  • Matthew Ashenfarb

    (Yale School of the Environment)

  • Matthew J. Kotchen

    (Yale School of the Environment and National Bureau of Economic Research (NBER))

Abstract

This paper develops a method for deriving stated preference (SP) estimates of the average social cost of carbon (ASCC) for use in evaluation of the benefits and costs of climate policy. We illustrate the approach with a general population survey in the United States, combined with a benefits transfer to other countries. We estimate a global ASCC of $39 per tonne. The estimate is sensitive to assumptions about the income elasticity of WTP and the rate of change in marginal abatement costs. Reasonable scenarios create a range of estimates between $12-$118 per tonne. We also examine the impact of distributional weighting based on the elasticity of the marginal utility of income, providing distributionally-weighted estimates of the global ASCC for use in all countries. We argue that a SP estimate of the ASCC is a useful complement to existing estimates of the marginal social cost of carbon (SCC) based on different valuation approaches. Our framework also enables translation of global benefit measures into corresponding WTP amounts, and this provides a useful benchmark for interpreting other SCC estimates in the literature.

Suggested Citation

  • Matthew Ashenfarb & Matthew J. Kotchen, 2025. "A Method for Deriving Stated Preference Estimates of the Average Social Cost of Carbon," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(8), pages 2059-2083, August.
    • Handle: RePEc:kap:enreec:v:88:y:2025:i:8:d:10.1007_s10640-025-01000-1
    DOI: 10.1007/s10640-025-01000-1
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