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A lower bound to the social cost of CO2 emissions

Nature Climate Change volume 4, pages 253258 (2014) | Download Citation

Abstract

Many studies have estimated the social cost of carbon (SCC). We critically evaluate SCC estimates, focusing on omitted cost categories, discounting, uncertainties about damage costs and risk aversion. This allows for the calculation of a lower bound to the SCC. Dominant SCC values turn out to be gross underestimates, notably, but not only, for a low discount rate. The validity of this lower bound is supported by a precautionary approach to reflect risk aversion against extreme climate change. The results justify a more stringent climate policy than is suggested by most influential past studies.

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Acknowledgements

We are grateful to five reviewers for comments and suggestions. JvdB received financial support from the European Commission through the FP7 project WWWforEUrope (grant agreement nr. 290647). WB received financial support from a VENI grant from the Netherlands Organisation for Scientific Research (NWO) and from the European Commission through the FP7 project ENHANCE (grant agreement nr. 308438).

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Affiliations

  1. ICREA, Barcelona, and Institute of Environmental Science and Technology, Universitat Autonòma de Barcelona, Edifici Cn, Campus UAB, 08193 Bellaterra, Spain, and Faculty of Economics and Business Administration, VU University Amsterdam, The Netherlands

    • J. C. J. M. van den Bergh
  2. Department of Environmental Economics, Institute for Environmental Studies, VU University, De Boelelaan 1087, 1081HV, Amsterdam, The Netherlands

    • J. C. J. M. van den Bergh
    •  & W. J. W. Botzen

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Contributions

J.vdB. and W.B. wrote the paper jointly.

Competing interests

The authors declare no competing financial interests.

Corresponding author

Correspondence to W. J. W. Botzen.

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DOI

https://doi.org/10.1038/nclimate2135

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