What Social Cost of Carbon? A mapping of the Climate Debate

Given disparate beliefs about economic growth, technical change and damage caused by climate change, this paper starts with the seeming impossibility of determining a unique time profile of the social costs of carbon as a benchmark for climate negotiations and for infrastructure decisions that need to be made now in the absence of an inclusive international accord on climate policies. The paper demonstrates that determining a workable range of the social costs of carbon is however possible in a sequential decision-making framework that permits revising initial decisions in the light of new information. To do so, the paper exploits the results of a stochastic optimal control model run for more than 2000 scenarios that represent the set of beliefs presented about key uncertain parameters in the literature. The paper provides a heuristic mapping of the climate debate in the form of six “clubs of opinions” and shows the possibility of determining a range of social costs of carbon that might permit a compromise between the maximum range of “clubs” and those most likely to emerge in the future.


Issue Date:
2012-05
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/128201
Total Pages:
29
JEL Codes:
Q540; Q21; O41; D81 Q540; D81




 Record created 2017-04-01, last modified 2017-08-26

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