Two researchers at Stanford University estimate that the social cost of carbon on the global economy is actually about USD 220 for each tonnes of carbon dioxide emitted.
The research paper contends that current government estimates of the “social cost of carbon” — a key metric of the economic damage caused by climate change used in cost-benefit analysis of regulations — could fall woefully short of reality.
One key explanation for the big disparity is the likelihood of stunted GDP growth when countries use their capital to repair damage related to climate change. That idea dovetails with conversations on the necessity of building both companies and cities resilient enough to rebound from future shocks related to environmental volatility, disease or other forms of unrest.
The social cost of carbon is a government measure of the economic costs to society from one metric tonne of carbon dioxide emissions. The metric includes variables such as lost agricultural productivity, property damage from floods and health costs from certain diseases. It was developed five years ago in response to a U.S. District Court order requiring the Obama administration to include climate benefits cost analysis in regulations.
The researchers argue that the federal government figure does not take into account stunted growth in GDP when agricultural production is lower year after year, or when capital must be used to rebuild after climate disasters rather than investing in new facilities or growth.