Urban and Non-Urban Contributions to the Social Cost of Carbon

Francisco Estrada, Veronica Lupi (), Wouter Botzen and Richard Tol
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Veronica Lupi: Department of Institute for Environmental Studies (IVM), Vrije Universiteit, Amsterdam 1081 HV, the Netherlands, Fondazione Eni Enrico Mattei, Milan

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: The social cost of carbon (SCC) serves as a concise gauge of climate change's economic impact, often reported at the global and country level. SCC values are disproportionately high for less-developed, populous countries. Assessing the contributions of urban and non-urban areas to the SCC can provide additional insights for climate policy. Cities are essential for defining global emissions, influencing warming levels and associated damages. High exposure and concurrent socioenvironmental problems exacerbate climate change risks in cities. Using a spatially explicit integrated assessment model, the SCC is estimated at USD$137-USD$579/tCO2, rising to USD$262-USD$1,075/tCO2 when including urban heat island (UHI) warming. Urban SCC dominates, with both urban exposure and the UHI contributing significantly. A permanent 1% reduction of the UHI in urban areas yields net present benefits of USD$484-USD$1,562 per urban dweller. Global cities have significant leverage and incentives for a swift transition to a low-carbon economy, and for reducing local warming.

Date: 2024-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-ure
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Working Paper: Urban and non-urban contributions to the social cost of carbon (2024)
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