The Social Cost of Carbon, Risk, Distribution, Market Failures

Abstract

Designing policy for climate change requires analyses which integrate the interrelationship between the economy and environment, including: the immense risks and impacts on distribution across and within generations; the many failures, limitations or absences of key markets; and the limitations on government, both in offsetting these failures and distributional impacts.

Much of the standard economic modelling, including Integrated Assessment Models, does not embody key aspects of these essentials.

We identify fundamental flaws in both the descriptive and normative methodologies commonly used to assess climate policy, showing systematic biases, with costs of climate action overestimated and benefits underestimated. We provide an alternative methodology by which the social cost of carbon may be calculated, one which embraces the essential elements we have identified.


Decoupling for ecological sustainability

Abstract

The idea of decoupling “environmental bads” from “economic goods” has been proposed as a path towards sustainability by organizations such as the OECD and UN. Scientific consensus reports on environmental impacts (e.g., greenhouse gas emissions) and resource use give an indication of the kind of decoupling needed for ecological sustainability: global, absolute, fast-enough and long-enough. This goal gives grounds for a categorisation of the different kinds of decoupling, with regard to their relevance.

We conducted a survey of recent (1990–2019) research on decoupling on Web of Science and reviewed the results in the research according to the categorisation.

The reviewed 179 articles contain evidence of absolute impact decoupling, especially between CO2 (and SOX) emissions and evidence on geographically limited (national level) cases of absolute decoupling of land and blue water use from GDP, but not of economy-wide resource decoupling, neither on national nor international scales.

Evidence of the needed absolute global fast-enough decoupling is missing.


Integrated assessment climate policy models

Excerpt

The “process-based” versions of these models are mathematical representations of the world, with modules representing the climate, biosphere, energy, and economy … The conundrum posed by climate change is that policymakers need to act immediately to avoid warming decades hence. IAMs help them to envisage the desired future and the impacts of climate policies. For example, researchers might specify an emissions target and then use an IAM to work out what policies and technologies might be the most cost-effective way to hit that target. These models aren’t crystal balls used for predictions; rather, they are a way to inform the policy discourse.