PROGRESS IN ESTIMATING THE MARGINAL COSTS OF GREENHOUSE GAS EMISSIONS

Richard S.J. Tol (), Thomas Downing, Samuel Fankhauser, Richard Richels and Joel Smith

No FNU-4, Working Papers from Research unit Sustainability and Global Change, Hamburg University

Abstract: The unjust distributional consequences of climate change, and its potentially negative aggregate effect on economic growth and welfare are two reasons to be concerned about climate change. Our knowledge of the impact of climate change is incomplete. Monetary valuation is difficult and controversial. The effect of other developments on the impacts of climate change is largely speculative. Nonetheless, it can be shown that poorer countries and people are more vulnerable than are richer countries and people. A modest global warming is likely to have a net negative effect on poor economics in hot climates, but may have a positive effect on rich economies in temperate climates. If one counts dollars, the world aggregate impact may be positive. If one counts people, the world aggregate effect is probably negative. For more substantial warming, negative effects become more negative, and positive effects turn negative. The marginal costs of carbon dioxide emissions are uncertain and sensitive to assumptions that partially reflect ethical and methodological positions, but are unlikely to exceed $50 per tonne of carbon. The marginal costs of methane emission are likely to be less than $250/tCH4; the marginal costs of nitrous oxide emissions are probably lower than $7000/tN2O. Global warming potentials, the official manner to trade-off the various greenhouse gases, do not reflect, conceptually or numerically, the real tradeoffs in either a cost-benefit or a cost-effectiveness framework.

Keywords: Impacts of climate change; economic valuation; equity; marginal costs (search for similar items in EconPapers)
JEL-codes: Q54 (search for similar items in EconPapers)
Date: 2001-01, Revised 2001-01
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Published, Pollution Atmosphérique – Numéro Spécial: Combien Vaut l’Air Propre?, 155-179

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Persistent link: http://EconPapers.repec.org/RePEc:sgc:wpaper:4

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