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Regional and Sectoral Estimates of the Social Cost of Carbon: An Application of FUND

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

Abstract

The social cost of carbon is an estimate of the benefit of reducing CO2 emissions by one ton today. As such it is a key input into cost-benefit analysis of climate policy and regulation. We provide a set of new estimates of the social cost of carbon from the integrated assessment model FUND 3.5 and present a regional and sectoral decomposition of our new estimate. China, Western Europe and the United States have the highest share of harmful impacts, with the precise order depending on the discount rate. The most important sectors in terms of impacts are agriculture and increased energy use for cooling. We present an extensive sensitivity analysis with respect to the discount rate, equity weights, different socio economic scenarios and values for the climate sensitivity parameter.

Suggested Citation

  • Anthoff, David & Rose, Steven K. & Tol, Richard S. J. & Waldhoff, Stephanie, 2011. "Regional and Sectoral Estimates of the Social Cost of Carbon: An Application of FUND," Papers WP375, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp375
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    References listed on IDEAS

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    1. Richard S. J. Tol, 1999. "The Marginal Costs of Greenhouse Gas Emissions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 61-81.
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    9. Tol, Richard S.J., 2012. "A cost–benefit analysis of the EU 20/20/2020 package," Energy Policy, Elsevier, vol. 49(C), pages 288-295.
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    12. Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change. Part 1: Benchmark Estimates," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 47-73, January.
    13. 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.
    14. Onno J. Kuik & Barbara Bucher & Michela Catenacci & Etem Karakaya & Richard S.J. Tol, 2006. "Methodological aspects of recent climate change damage cost studies," Working Papers FNU-122, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2006.
    15. Callan, Tim & Keane, Claire & Walsh, John R. & Lane, Marguerita, 2010. "From Data to Policy Analysis: Tax-Benefit Modelling using SILC 2008," Papers WP359, Economic and Social Research Institute (ESRI).
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    Cited by:

    1. Changxin Liu & Hailing Zhang & Zheng Wang, 2019. "Study on the Functional Improvement of Economic Damage Assessment for the Integrated Assessment Model," Sustainability, MDPI, vol. 11(5), pages 1-18, February.
    2. 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.
    3. Tol, Richard S.J., 2013. "Targets for global climate policy: An overview," Journal of Economic Dynamics and Control, Elsevier, vol. 37(5), pages 911-928.
    4. Dowling, Paul, 2013. "The impact of climate change on the European energy system," Energy Policy, Elsevier, vol. 60(C), pages 406-417.
    5. Tol, Richard S.J., 2012. "A cost–benefit analysis of the EU 20/20/2020 package," Energy Policy, Elsevier, vol. 49(C), pages 288-295.
    6. Jacobson, Mark Z. & Delucchi, Mark A. & Ingraffea, Anthony R. & Howarth, Robert W. & Bazouin, Guillaume & Bridgeland, Brett & Burkart, Karl & Chang, Martin & Chowdhury, Navid & Cook, Roy & Escher, Giu, 2014. "A roadmap for repowering California for all purposes with wind, water, and sunlight," Energy, Elsevier, vol. 73(C), pages 875-889.
    7. Ian Wing & Karen Fisher-Vanden, 2013. "Confronting the challenge of integrated assessment of climate adaptation: a conceptual framework," Climatic Change, Springer, vol. 117(3), pages 497-514, April.
    8. Mark Sommer & Kurt Kratena, 2020. "Consumption and production-based CO2 pricing policies: macroeconomic trade-offs and carbon leakage," Economic Systems Research, Taylor & Francis Journals, vol. 32(1), pages 29-57, January.
    9. Karen Fisher-Vanden & Ian Sue Wing & Elisa Lanzi & David Popp, 2013. "Modeling climate change feedbacks and adaptation responses: recent approaches and shortcomings," Climatic Change, Springer, vol. 117(3), pages 481-495, April.

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    More about this item

    Keywords

    cost/Social cost of carbon/cost-benefit analysis/Climate policy/Policy/regulation/decomposition/europe/impacts/discount rate/energy use/equity/scenarios;

    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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