The Social Cost of Carbon: Advances in Long-Term Probabilistic Projections of Population, GDP, Emissions, and Discount Rates
This paper, published in Brookings Papers on Economic Activity, examines the key methods and challenges involved in estimating a more accurate social cost of carbon.
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.
Brian C. Prest
Fellow; Director, Social Cost of Carbon Initiative
Brian Prest is an economist and fellow at Resources for the Future specializing in climate change, oil and gas, and energy economics.
William A. Pizer
Vice President for Research and Policy Engagement
Billy Pizer is Vice President for Research and Policy Engagement at RFF.
Richard G. Newell
President and CEO, Resources for the Future
Dr. Richard G. Newell is the President and CEO of Resources for the Future. From 2009 to 2011, he served as the administrator of the US Energy Information Administration, the agency responsible for official US government energy statistics and analysis.
David Anthoff is a university fellow at RFF and assistant professor in the Energy and Resources Group at the University of California, Berkeley. As an environmental economist, he studies climate change and environmental policy.
Senior Fellow Emeritus
Roger Cooke is a senior fellow emeritus at RFF. He joined RFF in September 2005 as the first appointee to the Chauncey Starr Chair in Risk Analysis.
Common Resources — Dec 21, 2022
RFF’s Top Stories of 2022
As 2022 winds down, the editorial team at Resources for the Future has reviewed the past 12 months of blog posts, magazine articles, and podcast episodes and curated a selection of notable pieces from the year.
Media Highlight — Dec 7, 2022
E&E News: “How EPA Beat the White House on Estimating Climate Damage”
A highlight of RFF’s recent work on a new estimate of the social cost of carbon.
Media Highlight — Nov 17, 2022
Bloomberg: "'No Brainer' Methane Rule Touts New EPA Approach to Carbon Costs"
This article, which cites RFF research and Fellow Brian Prest's expertise, discusses the EPA's recently proposed methane rule and the newly estimated social cost of carbon that it uses.
Common Resources — Nov 15, 2022
The US Environmental Protection Agency Introduces a New Social Cost of Carbon for Public Comment
The US Environmental Protection Agency has introduced an updated approach to estimating the social cost of carbon that incorporates important scientific and statistical advances.