authored by Adrien Bilal of Harvard and Diego Känzig of Northwestern suggests the “social cost of carbon” is much higher than previous estimates.
Using carbon prices on these “stick” markets to get a sense of the perceived value of carbon by economic participants leaves one deeply confused. What is the difference between various market prices for carbon and the SCC? Unfortunately for humanity, traded and subsidized prices for carbon are fantasies that have no basis in physical reality. The molecule carbon dioxide has very little intrinsic value, so carbon market prices essentially reflect political policy timing and corporate virtue signaling .
William Nordhaus, the Sterling Professor of Economics & Professor in the School of the Environment at Yale University built a vaunted academic career on his research into the economics of climate change which was rewarded by his winning of the . If this is Bill Nordhaus’ best guess on optimal temperature rise, my best guess is that Bill Nordhaus has not talked to any farmers or physical scientists.
While a silver back gorilla of the economics world like Nordhaus cares nothing about what your correspondent thinks, I believe his SCC estimate is ridiculous and his DICE model is a travesty. I have publicly called DICE “a weapon of mass destruction” inOne of the pillars of Nordhaus’ DICE model is an assumption that any drop in economic output caused by global warming can be extrapolated linearly from data that relates local temperatures and local output.
Bilal and Känzig sensibly reject Nordhaus’ association between local temperatures and state-level GDP. Instead, they build a dataset of 173 countries over 120 years that attempts to tie global changes in temperature to global economic output.emitted into the atmosphere carries with it a real cost to civilization of $1,056 per metric ton.