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Empirically-Constrained Climate Sensitivity and the Social Cost of Carbon

Author

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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    File URL: http://www.uoguelph.ca/economics/repec/workingpapers/2016/2016-08.pdf
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    References listed on IDEAS

    as
    1. Crost, Benjamin & Traeger, Christian P., 2013. "Optimal climate policy: Uncertainty versus Monte Carlo," Economics Letters, Elsevier, vol. 120(3), pages 552-558.
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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. repec:now:jnlsbe:102.00000071 is not listed on IDEAS
    3. McKitrick, Ross, 2017. "Global energy subsidies: An analytical taxonomy," Energy Policy, Elsevier, vol. 101(C), pages 379-385.
    4. 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.

    More about this item

    Keywords

    Social Cost of Carbon; Climate Sensitivity; Ocean Heat Uptake; Carbon Taxes; Integrated Assessment Models;

    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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