You’ve got questions, and we have answers. No question is too simple or complex for our panel of climate advisors who stand ready to field your questions about climate change.
Our expert today is Karen Florini. Karen most recently held multiple leadership roles at Climate Central, a non-profit climate science research and communication organization that creates highly localized information on climate impacts and solutions. Previously, she served as Deputy Special Envoy for Climate Change at the State Department. Earlier she spent more than two decades at the Environmental Defense Fund, working on environmental health and on climate change. She earned a law degree at Harvard, but now regards herself as a recovering lawyer.
Read other Q&A here, and don’t be shy about asking your questions here.
Q: How is the damage caused by global heating measured? E.g if I emit 100,000 tons of greenhouse gases in a year, how do I know my contribution to the damage caused by global heating? How is a dollar amount calculated for that damage?
A: One way to answer this question would be by using the “social cost of carbon.” As described by economists at Stanford University in 2021, “When we emit a ton of carbon dioxide in the atmosphere, it sticks around for a while and causes warming, affecting human outcomes. The social cost of carbon is the total damage that an additional ton of CO2 has on outcomes, converted into dollars.” In other words, the social cost of carbon is a way to assign a cost for climate harm now and in the future. This helps us understand the costs of inaction – of allowing climate change to progress – to compare it against the costs of acting today to mitigate climate change.
While that sounds straightforward, different presidential administrations come up with very different numbers. For example, the first Trump administration only assigned $3-$5 per ton to climate costs, while the Obama administration estimated it at $43/ton and Biden’s at $51/ton. (The Stanford explainer adds “[m]ost analysts tend to support the Obama administration’s estimate over the Trump administration’s.”)
In 2022, a multi-year expert evaluation by Resources for the Future (RFF) found that a more comprehensive analysis produced a much larger value: $185/ton.
Why such a big range? The Stanford explainer identifies three principal factors:
1. The anticipated severity of physical climate impacts, which then drive impacts on the economy. The Trump figure assumes lower physical damages and thus impacts, while the RFF figure incorporates the latest empirical research for key climate impacts, including on agriculture, mortality, energy consumption, and sea-level rise. The RFF figure also incorporates additional recommendations from the Valuing Climate Damages report by the National Academy of Sciences.
2. Whether to take into account the impacts of U.S. pollution on other countries, or to disregard non-U.S. impacts of U.S. pollution. The Trump figure, unlike the others, considers only U.S. impacts.
3. The choice of the “discount rate,” which translates future damage to values in current dollars. The Trump administration used a 7% rate; as a result, impacts that occur more than a couple decades in the future are massively discounted. For example, with a 7% discount rate, $10 million 30 years from now would have a present value of only $1.3 million; with a 3% discount rate, the figure is nearly four times as much, namely $4.1 million.
While a market-level discount rate makes sense when applied to purely financial matters (because of the potential to earn a return on money over time), most economists have concluded that a far-lower discount rate is more appropriate in the public policy context when dealing with non-financial impacts, such as increased disease, higher levels of premature death, or bigger and more powerful natural disasters. And a lower discount rate reflects most people’s preferences for leaving their children a better world. The Obama and Biden calculations used a 3% discount rate, while RFF used 2%.
The science and methodology used by RFF’s expert panel indicates that the social cost of carbon is considerably higher than any of the figures officially adopted so far – and indicates that our personal carbon footprint has a higher cost than most people realize.
