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

Baptiste Perrissin Fabert, Patrice Dumas and Jean-Charles Hourcade
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Baptiste Perrissin Fabert: Centre International de Recherche sur l’Environnement et le Développement (CIRED)

No 2012.34, Working Papers from Fondazione Eni Enrico Mattei

Abstract: 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.

Keywords: Optimal control; Mitigation; Social Cost of Carbon; Uncertainty (search for similar items in EconPapers)
JEL-codes: D81 O41 Q21 Q54 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (7)

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Working Paper: What Social Cost of Carbon? A mapping of the Climate Debate (2012)
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