By Phil Davies
Increased greenhouse emissions from human activity have put the Earth firmly on the path to a warmer future, with rising seas, melting glaciers, and increased mortality from heat and famine. But how will those changes play out in different economic sectors and countries, and at what cost to society? Will more frequent droughts trigger mass migration, increasing the costs of housing and medical care? And what price are we willing to pay to prevent damages expected to occur decades or centuries from now?
These are just a few of the questions bedeviling researchers as they labor to improve the social cost of carbon (SCC), a wonky number that captures the economic burden to society at a given point in the future of a metric ton of carbon dioxide released today. Because the SCC represents the economic benefit we’ll reap tomorrow by cutting CO2 emissions today, it gives us a way to put a dollar value on efforts to reduce future emissions and forestall climate change.
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The current SCC estimates omit various impacts that would likely increase damages, such as more frequent wildfires and large-scale migration in response to climate change. The Climate Impact Lab, a collaboration of the University of Chicago, the Rhodium Group and other U.S.research institutions, is tapping the power of big data to fully account for important and often interrelated effects of climate change. For example, a 2018 Climate Impact Lab report showed that, based on current emissions trends, 1.5 million more people than previously estimated would die annually from the effects of climate change by 2100. In a recent policy brief, The Institute for Policy Integrity (IPI), a New York City-based think tank sponsored by the New York University School of Law that advocates for sound cost-benefit analysis in government, argues that the inherent uncertainty of SCC estimates calls for stronger, not weaker, action to combat climate change; policymakers should risk erring on the high side when counting the cost of carbon.