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Developing a Social Cost of Carbon for US Regulatory Analysis: A Methodology and Interpretation

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  • Michael Greenstone
  • Elizabeth Kopits
  • Ann Wolverton

Abstract

The US government recently developed a range of values representing the monetized global damages associated with an incremental increase in carbon dioxide (CO 2 ) emissions, commonly referred to as the social cost of carbon (SCC). These values are currently used in benefit--cost analyses to assess potential federal regulations. For 2010, the central value of the SCC is $21 per ton of CO 2 emissions, with sensitivity analyses to be conducted at $5, $35, and $65 per ton of CO 2 (2007 dollars). This article summarizes the methodology and interagency process used to develop these SCC values, offers our own commentary on how the SCC can be used to inform regulatory decisions, and identifies priorities for further research. (JEL: Q54, Q51, and Q58) Copyright 2013, Oxford University Press.

Suggested Citation

  • Michael Greenstone & Elizabeth Kopits & Ann Wolverton, 2013. "Developing a Social Cost of Carbon for US Regulatory Analysis: A Methodology and Interpretation," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 23-46, January.
  • Handle: RePEc:oup:renvpo:v:7:y:2013:i:1:p:23-46
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    File URL: http://hdl.handle.net/10.1093/reep/res015
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    Cited by:

    1. Alberini, Anna & Towe, Charles, 2015. "Information v. energy efficiency incentives: Evidence from residential electricity consumption in Maryland," Energy Economics, Elsevier, vol. 52(S1), pages 30-40.
    2. Ian W. R. Martin & Robert S. Pindyck, 2015. "Averting Catastrophes: The Strange Economics of Scylla and Charybdis," American Economic Review, American Economic Association, vol. 105(10), pages 2947-2985, October.
    3. Bommier, Antoine & Lanz, Bruno & Zuber, Stéphane, 2015. "Models-as-usual for unusual risks? On the value of catastrophic climate change," Journal of Environmental Economics and Management, Elsevier, vol. 74(C), pages 1-22.
    4. Havranek, Tomas & Irsova, Zuzana & Janda, Karel & Zilberman, David, 2015. "Selective reporting and the social cost of carbon," Energy Economics, Elsevier, vol. 51(C), pages 394-406.
    5. Matthew Adler & Nicolas Treich, 2015. "Prioritarianism and Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 279-308, October.
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    8. Tol, Richard S.J., 2017. "The structure of the climate debate," Energy Policy, Elsevier, vol. 104(C), pages 431-438.
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    10. Geoffrey Heal, Anthony Millner, 2017. "Uncertainty and ambiguity in environmental economics: conceptual issues," GRI Working Papers 278, Grantham Research Institute on Climate Change and the Environment.
    11. Robert Hahn & Robert Ritz, 2014. "Optimal Altruism in Public Good Provision," Cambridge Working Papers in Economics 1403, Faculty of Economics, University of Cambridge.
    12. Chambers, Robert G. & Melkonyan, Tigran, 2017. "Ambiguity, reasoned determination, and climate-change policy," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 74-92.
    13. van Benthem, Arthur, 2015. "What is the optimal speed limit on freeways?," Journal of Public Economics, Elsevier, vol. 124(C), pages 44-62.
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    15. Joseph S. Shapiro, 2016. "Trade Costs, CO2, and the Environment," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 220-254, November.
    16. Hannum, Christopher & Cutler, Harvey & Iverson, Terrence & Keyser, David, 2017. "Estimating the implied cost of carbon in future scenarios using a CGE model: The Case of Colorado," Energy Policy, Elsevier, vol. 102(C), pages 500-511.
    17. He, Daijie & Pang, Yusong & Lodewijks, Gabriel, 2017. "Green operations of belt conveyors by means of speed control," Applied Energy, Elsevier, vol. 188(C), pages 330-341.
    18. repec:eee:tefoso:v:125:y:2017:i:c:p:289-298 is not listed on IDEAS
    19. Lucas W. Davis & Alan Fuchs & Paul Gertler, 2014. "Cash for Coolers: Evaluating a Large-Scale Appliance Replacement Program in Mexico," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 207-238, November.
    20. Lucas W. Davis, 2017. "The Environmental Cost of Global Fuel Subsidies," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    21. repec:eee:ecolec:v:144:y:2018:i:c:p:171-185 is not listed on IDEAS
    22. Wang, Mingzheng & Liu, Junling & Chan, Hau-Ling & Choi, Tsan-Ming & Yue, Xiaohang, 2016. "Effects of carbon tariffs trading policy on duopoly market entry decisions and price competition: Insights from textile firms of developing countries," International Journal of Production Economics, Elsevier, vol. 181(PB), pages 470-484.

    More about this item

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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