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Does the social Cost of Carbon Matter?: An Assessment of U.S. Policy

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  • Robert w. Hahn
  • Robert A. Ritz

Abstract

we evaluate a recent u.s. initiative to include the social cost of carbon (sCc) in regulatory decisions. To our knowledge, this paper provides the first systematic test of the extent to which applying the SCC has affected national policy. we examine all economically significant federal regulations since 2008, and obtain a surprising result: Putting a value on changes in carbon dioxide emissions does not generally affect the ranking of the preferred policy compared with the status quo. overall, we find little evidence that use of the SCC has affected u.s. policy choices to date. we offer an explanation related to the political economy of regulation.

Suggested Citation

  • Robert w. Hahn & Robert A. Ritz, 2013. "Does the social Cost of Carbon Matter?: An Assessment of U.S. Policy," Cambridge Working Papers in Economics 1346, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1346
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1346.pdf
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    References listed on IDEAS

    as
    1. Anthoff, David & Rose, Steven & Tol, Richard S. J. & Waldhoff, Stephanie, 2011. "Regional and sectoral estimates of the social cost of carbon: An application of FUND," Economics Discussion Papers 2011-18, Kiel Institute for the World Economy (IfW).
    2. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, pages 1037-1041.
    3. Robert A. Ritz, 2009. "Carbon leakage under incomplete environmental regulation: An industry-level approach," Economics Series Working Papers 461, University of Oxford, Department of Economics.
    4. Marten, Alex L. & Newbold, Stephen C., 2012. "Estimating the social cost of non-CO2 GHG emissions: Methane and nitrous oxide," Energy Policy, Elsevier, vol. 51(C), pages 957-972.
    5. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, pages 409-434.
    6. Richard S. J. Tol, 2009. "The Economic Effects of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 29-51, Spring.
    7. McCubbins, Mathew D & Noll, Roger G & Weingast, Barry R, 1987. "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics, and Organization, Oxford University Press, vol. 3(2), pages 243-277, Fall.
    8. Lucas W. Davis & Erich Muehlegger, 2010. "Do Americans consume too little natural gas? An empirical test of marginal cost pricing," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 791-810.
    9. Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November.
    10. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, pages 174-177.
    11. Robert W. Hahn & Paul C. Tetlock, 2008. "Has Economic Analysis Improved Regulatory Decisions?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 67-84, Winter.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. SCC: much ado about nothing?
      by John Whitehead in Environmental Economics on 2013-12-10 16:58:32

    More about this item

    Keywords

    Cost-Benefit Analysis; Social Cost of Carbon; Climate Policy; Regulatory Innovation;

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • 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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