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The marginal damage costs of different greenhouse gases: An application of FUND

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  • Waldhoff, Stephanie
  • Anthoff, David
  • Rose, Steven K.
  • Tol, Richard S. J.

Abstract

The authors use FUND 3.9 to estimate the social cost of four greenhouse gases-carbon dioxide, methane, nitrous oxide, and sulphur hexafluoride-with sensitivity tests for carbon dioxide fertilization, terrestrial feedbacks, climate sensitivity, discounting, equity weighting, and socioeconomic and emissions assumptions. They also estimate the global damage potential for each gas-the ratio of the social cost of the non-carbon dioxide greenhouse gas to the social cost of carbon dioxide. For all gases, they find the social costs and damage potentials sensitive to alternative assumptions. The global damage potentials are compared to global warming potentials (GWPs), a key metric used to compare gases. The authors find that global damage potentials are higher than GWPs in nearly all sensitivities. This finding suggests that previous papers using GWPs may be underestimating the relative importance of reducing non-carbon dioxide greenhouse gas emissions from a climate damage perspective. Of particular interest is the sensitivity of results to carbon dioxide fertilization, which notably reduces the social cost of carbon dioxide, but only has a small effect on the other gases. As a result, the global damage potentials for methane and nitrous oxide are much higher with carbon dioxide fertilization included, and higher than many previous estimates.

Suggested Citation

  • Waldhoff, Stephanie & Anthoff, David & Rose, Steven K. & Tol, Richard S. J., 2014. "The marginal damage costs of different greenhouse gases: An application of FUND," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-33.
  • Handle: RePEc:zbw:ifweej:201431
    DOI: 10.5018/economics-ejournal.ja.2014-31
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    References listed on IDEAS

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    2. P. Michael Link & Richard S. J. Tol, 2004. "Possible economic impacts of a shutdown of the thermohaline circulation: an application of FUND," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 3(2), pages 99-114, September.
    3. Richard S.J. Tol, 2006. "Multi-Gas Emission Reduction for Climate Change Policy: An Application of Fund," The Energy Journal, , vol. 27(3_suppl), pages 235-250, December.
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    9. Kandlikar, Milind, 1995. "The relative role of trace gas emissions in greenhouse abatement policies," Energy Policy, Elsevier, vol. 23(10), pages 879-883, October.
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    More about this item

    Keywords

    climate change; social cost; carbon dioxide; methane; nitrous oxide; sulphur hexafluoride;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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