A tale of tails: Uncertainty and the social cost of carbon dioxide

Artikel

Recent thinking about the economics of climate change has concerned the uncertainty about the upper bound of both climate sensitivity to greenhouse gases and the damages that might occur at high temperatures. This argument suggests that the appropriate probability distributions for these factors may be fat-tailed. The matter of tail shape has important implications for the calculation of the social cost of carbon dioxide (SCCO2). In this paper a probabilistic integrated assessment model is adapted to allow for the possibility of a thin, intermediate or fat tail for both (i) the climate sensitivity parameter and (ii) the damage function exponent. Results show that depending on the tail shape of the climate sensitivity parameter the mean SCCO2 rises by 2985%. Changes in the mean SCCO2 due to the adjustments to the damage function alone range from a reduction of 7% to a rise of 12%. The combination of both leads to rises of 3315%. Greater rises occur for the upper percentiles of the SCCO2 estimates. Given the uncertainties in both the science and the economics of climate change different tail shapes deserve consideration due to their important implications for the range of possible values for the SCCO2.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Journal: Economics: The Open-Access, Open-Assessment E-Journal ; ISSN: 1864-6042 ; Volume: 5 ; Year: 2011 ; Issue: 2011-22 ; Pages: 1-29 ; Kiel: Kiel Institute for the World Economy (IfW)

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Climate; Natural Disasters and Their Management; Global Warming
• Thema: climate change ; integrated assessment models ; social cost of carbon dioxide ; uncertainty ; Klimaveränderung ; Kohlendioxid ; Soziale Kosten ; Statistische Verteilung ; Wahrscheinlichkeitsrechnung

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Pycroft, Jonathan ; Vergano, Lucia ; Hope, Chris ; Paci, Daniele ; Ciscar, Juan Carlos
• Ereignis: Veröffentlichung
• (wer): Kiel Institute for the World Economy (IfW)
• (wo): Kiel
• (wann): 2011

Weitere Informationen

• DOI: doi:10.5018/economics-ejournal.ja.2011-22
• Handle: http://hdl.handle.net/10419/54199
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ