The U.S. government has grossly underestimated the social costs of carbon emissions, according to a report that points to fundamental flaws in the way damages are calculated.
Those costs are the basis for key policies in everything from power-plant regulations to car fuel-efficiency standards.
While the government estimates the social costs at about $21 per ton, the research finds it is much, much higher – as high as $893 per ton in 2010 and $1,550 in 2050.
The peer-reviewed report by the Economics for Equity and the Environment Network (E3 Network) brings into question government analyses on the benefits of reducing emissions and on therefore which policies would be cost effective.
"The government has been making decisions based on the flawed calculation that carbon dioxide emissions cost just $21 per ton. In fact, the real cost may be up to forty times that amount," says Dr. Elizabeth Stanton, economist and co-author of the report.
After comparing prior research on the cost of reducing emissions with the report’s new findings, the authors conclude it’s extremely likely that it’s much more expensive to do nothing about climate change than it is to actively adopt mitigation measures.
"Now that we know how much we could end up paying to endure the impacts of climate change, investing in reducing our emissions is clearly the prudent option," says report author and economist, Dr. Frank Ackerman. "It’s the difference between servicing your car, or waiting for it to break down on the highway."
In addition to E3 Network, the World Resources Institute and the Environmental Law Institute today released a related report on the social cost of carbon. More than Meets the Eye: The Social Cost of Carbon in U.S. Climate Policy, in Plain English examines how cost-benefit analysis often include judgment calls and assumptions that do not adequately measure the real harm inflicted from climate change.
Read E3’s report, "Climate Risks and Carbon Prices: Revising the Social Cost of Carbon", the executive summary, the peer review and other materials here:
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