I am happy to share that VoxEU — CEPR’s policy portal — has published the following column about our article Three reasons to price carbon under uncertainty: accuracy of simple rules with my amazing co-authors Ton van den Bremer and Rick van der Ploeg.
The social cost of carbon is the estimated present discounted value of economic damages from emitting one ton of carbon dioxide into the atmosphere today. This column proposes a straightforward way to calculate the cost which takes into account the damages to aggregate production, the risk of recurring climate disasters, and the risk of a climate tipping point. The new approach produces similar results to complex traditional models. The high estimates of the social cost of carbon imply there is strong case for implementing carbon taxes or other market-based policies to incentivise the reduction of carbon dioxide emissions.
