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Empirically-Constrained Climate Sensitivity and the Social Cost of Carbon

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Listed:
  • Kevin Dayaratna

    (Heritage Foundation, Washington DC.)

  • Ross Mckitrick

    () (Department of Economics and Finance, University of Guelph)

  • David Kreutzer

    (Heritage Foundation, Washington DC.)

Abstract

Integrated Assessment Models (IAMs) require parameterization of both economic and climatic processes. The latter includes Equilibrium Climate Sensitivity (ECS), or the temperature response to doubling CO2 levels, and Ocean Heat Uptake (OHU) efficiency. ECS distributions in IAMs have been drawn from climate model runs that lack an empirical basis,and in Monte Carlo experiments may not be constrained to consistent OHU values. EmpiricalECS estimates are now available, but have not yet been applied in IAMs. We incorporate a new estimate of the ECS distribution conditioned on observed OHU efficiency into two widely-used IAMs. The resulting Social Cost of Carbon (SCC) estimates are much lower than those from models based on simulated parameters. In the DICE model the average SCC falls by 30-50% depending on the discount rate, while in the FUND model the average SCC falls by over 80%. The span of estimates across discount rates also shrinks substantially

Suggested Citation

  • Kevin Dayaratna & Ross Mckitrick & David Kreutzer, 2016. "Empirically-Constrained Climate Sensitivity and the Social Cost of Carbon," Working Papers 1608, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2016-08
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    Cited by:

    1. Tol, Richard S.J., 2017. "The structure of the climate debate," Energy Policy, Elsevier, vol. 104(C), pages 431-438.
    2. Kevin D. Dayaratna & Ross McKitrick & Patrick J. Michaels, 2020. "Climate sensitivity, agricultural productivity and the social cost of carbon in FUND," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(3), pages 433-448, July.
    3. McKitrick, Ross & Lee, Jamie, 2017. "Forming a Majority Coalition for Carbon Taxes under a State-Contingent Updating Rule," Strategic Behavior and the Environment, now publishers, vol. 6(4), pages 289-309, November.
    4. McKitrick, Ross, 2017. "Global energy subsidies: An analytical taxonomy," Energy Policy, Elsevier, vol. 101(C), pages 379-385.
    5. Jin, Gui & Shi, Xin & Zhang, Lei & Hu, Shougeng, 2020. "Measuring the SCCs of different Chinese regions under future scenarios," Renewable and Sustainable Energy Reviews, Elsevier, vol. 130(C).
    6. G. Cornelis van Kooten, 2020. "Climate Change and Agriculture," Working Papers 2020-01, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.

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    More about this item

    Keywords

    Social Cost of Carbon; Climate Sensitivity; Ocean Heat Uptake; Carbon Taxes; Integrated Assessment Models;
    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
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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