The cost-benefit analysis of climate change, called the “social cost of carbon,” is an official tool the government uses in decision making, applying official cost-benefit analysis in this case to climate change.
The social cost of carbon estimates the savings made by society for every metric ton of carbon dioxide prevented from reaching the atmosphere.
Expressed in monetary value, the government estimates the social cost of carbon to be $21 per ton at present.
But the World Resources Institute said there are “significant weaknesses” in current ways of determining the social cost of carbon, implying that figures reached with current methods could be inaccurate.
“Our significant concern is the lack of transparency inherent in the models used to estimate the social cost of carbon,” said Scott Schang, vice president for climate and sustainability of the Environmental Law Institute which released the report with W.R.I.
“Some of the models are opaque, and few policymakers are likely to understand the dramatic simplifications and assumptions embedded within them. There is much room for debate whether these tools are ready for use in policymaking.”
For example, many models reportedly minimize, or do not consider, the possibility of “abrupt, irreversible catastrophic climate changes.”
“Others ignore regional temperature effects and instead assume the earth is warming uniformly,” the W.R.I. statement read.
Climate modelers also use models that shift the burden of action to future generations, assuming future citizens will better afford mitigation investments.
“Far from being transparent to the policymakers, some of the models are black boxes when it comes to understanding the component parts because of their complexity and obscure programming language,” the institute states.
To elaborate on their points, the institute took cost benefit analysis in Britain as an example.
“In the United States, government estimates find the value of a metric ton of carbon range from $5 to $65 per ton of carbon, with a central value of $21. Meanwhile, the United Kingdom finds a range from $41 to $124 per ton of carbon dioxide, with a central value of $83.
“In other words, the U.K. numbers support regulation four times as stringent as the U.S. central value.”
The institute said new studies on the social cost of carbon put the value as high as $893 per ton in 2010 and $1,550 in 2050, compared with the government’s $21 figure.
“One way to remedy this problem is through more robust dialogue between economists developing the [social cost of carbon] and climate scientists and others working to understand the damages that climate change is imposing,” according to the report. (L.J. Polintan)
