Climate Change Economics: The Social Cost of Carbon discount rate

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[...] Parametrization of Simulation B Simulation B takes its parameters from the 2009 article Risk Aversion, Time Preference, and the Social Cost of Carbon written by Anthoff et al. The authors wish to show that the elasticity of marginal utility of consumption is more important in determining the SCC than the rate of pure time preference. They use the following parameters: ? = 0.1% and ? = 1 and find a SCC equal to $10/tCO2 in 2030. Using the same parameters with the 2016 DICE model we find a SCC equal to $3.8/tC by 2030, to $7.3/tCO2 by 2050 and to $21.8/tCO2 by 2100. [...]

[...] Parametrization of Simulation A The parametrization of Simulation A is taken from the 2018 article, Carbon Prices for the Next Hundred Years, written by Gerlagh and Liski. The authors attempt to determine the optimal SCC when climate-change impacts are unknown1. As learning about the impact of climate change increases the carbon price, they expect the price to grow faster than the economy in the long run. However, they find that, when climate-change impacts are unknown, the SCC grows at the rate of the economy until 2100. The researchers ran a simulation using the following parameters: ? is equal to 0.07% and ? [...]

[...] Lomborg Global Crises, Global solutions, Cambridge University Press, Cambridge (2004) Economic and Social Dimensions of Climate Change: Summary for Policy Makers Climate Change: 1995, Cambridge University Press, New York (1996) Gerlagh, R. and Liski. M "Carbon Prices for the Next Hundred Years." The Economic Journal (London), vol no Wiley Subscription Services, Inc, pp. 728-57, doi:10.1111/ecoj.12436. Guo, Jiehan, et al "Discounting and the Social Cost of Carbon: a Closer Look at Uncertainty." Environmental Science & Policy, vol no Elsevier Ltd pp. 205-16, doi:10.1016/j.envsci.2005.11.010. [...]

[...] Annexes Table Summary of the Parametrization Choices Parameterization A Parametrization B Parametrization C ; 1.2 0.1% ; 1 0.03% ; 1.3 SCC 2030 2050 2100 6,7 12.5 37.3 3.8 7.3 21.8 24.5 43.9 129.4 GTC 2030 2050 2100 975.7 1165.5 1688.1 977.5 1172.7 1728.8 976.9 1134.6 1519.4 Figure Simulation of SCC per tCO2 from 2020 to 2130 Figure Simulation of SCC per tCO2 from 2020 to 2060 Figure Simulation of atmospheric temperature increase by degrees Celsius above pre industrial times from 2020 to 2130 Overall, Parametrization which assigned the highest SCC yields the lowest temperature increase and Parametrization which assigned the lowest SCC yields the highest temperature increase. Figure Simulation of atmospheric concentrations of CO2 by GTC from 2020 to 2100 The three trajectories are not as distinct as for the other variables. Overall, Parametrization C yields the lowest concentration of CO2 and Parametrization B yields the highest. Bibliography: Ackerman, Frank, and Elizabeth A. Stanton "Climate Economics: The State of the Art", Taylor & Francis Group, ProQuest eBook Central, http://ebookcentral.proquest.com/lib/sciences-po/detail.action?docID=1125161. Anthoff, D. et al "Discounting for Climate Change." Economics. [...]

[...] They estimated the social cost of carbon for a wide range of values, we use the parameters: ? = 0.03% and ? = 1.3. The researchers find a SCC equal to $43.9/tCO2 by 2050. Using these parameters, we find the cost of carbon of $24.5/tCO2 by 2030, equal to $43.9/tCO2 by 2050 and equal to $129.4/tCO2 by the end of the century. The corresponding increase in temperature compared to pre-industrial times is also very close to Simulation A and B and equal to 1.3°C by 2030, 2.1°C by 2050 and to 3.7°C by the end of the century. [...]