The Social Cost of Carbon: Advances in Long-Term Probabilistic Projections of Population, GDP, Emissions, and Discount Rates

Kevin Rennert, Brian Prest, William Pizer, Richard G. Newell, David Anthoff, Cora Kingdon, Lisa Rennels, Roger Cooke, Adrian E. Raftery, Hana Sevcikova and Frank Errickson
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Kevin Rennert: Resources for the Future
Richard G. Newell: Resources for the Future
David Anthoff: University of California, Berkeley
Cora Kingdon: University of California, Berkeley
Lisa Rennels: University of California, Berkeley
Roger Cooke: Resources for the Future
Adrian E. Raftery: University of Washington
Hana Sevcikova: University of Washington
Frank Errickson: Princeton University

Brookings Papers on Economic Activity, 2021, vol. 52, issue 2 (Fall), 223-305

Abstract: The social cost of carbon (SCC) is a crucial metric for informing climate policy, most notably for guiding climate regulations issued by the US government. Characterization of uncertainty and transparency of assumptions are critical for supporting such an influential metric. Challenges inherent to SCC estimation push the boundaries of typical analytical techniques and require augmented approaches to assess uncertainty, raising important considerations for discounting. This paper addresses the challenges of projecting very long-term economic growth, population, and greenhouse gas emissions, as well as calibration of discounting parameters for consistency with those projections. Our work improves on alternative approaches, such as nonprobabilistic scenarios and constant discounting, that have been used by the government but do not fully characterize the uncertainty distribution of fully probabilistic model input data or corresponding SCC estimate outputs. Incorporating the full range of economic uncertainty in the social cost of carbon underscores the importance of adopting a stochastic discounting approach to account for uncertainty in an integrated manner.

Keywords: social cost of carbon; climate policy and regulations; US economy (search for similar items in EconPapers)
Date: 2021
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Working Paper: The Social Cost of Carbon: Advances in Long-Term Probabilistic Projections of Population, GDP, Emissions, and Discount Rates (2021)
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