A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
Risk aversion, time preference, and the social cost of carbon
The Stern Review reported a social cost of carbon of over $300/tC, calling for ambitious climate policy. We here conduct a systematic sensitivity analysis of this result on two crucial parameters: the rate of pure time preference, and the rate of risk aversion. We show that the social cost of carbon lies anywhere in between 0 and $120 000/tC. However, if we restrict these two parameters to matching observed behaviour, an expected social cost of carbon of $60/tC results. If we correct this estimate for income differences across the world, the social cost of carbon rises to over $200/tC.
Risk aversion, time preference, and the social cost of carbon
The Stern Review reported a social cost of carbon of over $300/tC, calling for ambitious climate policy. We here conduct a systematic sensitivity analysis of this result on two crucial parameters: the rate of pure time preference, and the rate of risk aversion. We show that the social cost of carbon lies anywhere in between 0 and $120 000/tC. However, if we restrict these two parameters to matching observed behaviour, an expected social cost of carbon of $60/tC results. If we correct this estimate for income differences across the world, the social cost of carbon rises to over $200/tC.
Risk aversion, time preference, and the social cost of carbon
Risk aversion, time preference, and the social cost of carbon
David Anthoff (author) / Richard S J Tol (author) / Gary W Yohe (author)
Environmental Research Letters ; 4 ; 024002
2009-04-01
7 pages
Article (Journal)
Electronic Resource
English
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