What Social Cost of Carbon? A Mapping of the Climate Debate

29 Pages Posted: 19 Jun 2012

See all articles by Baptiste Perrissin Fabert

Baptiste Perrissin Fabert

Centre International de Recherche sur l’Environnement et le Développement (CIRED)

P. Dumas

CIRED

Jean-Charles Hourcade

CIRED, International Research Center on Environment & Development, France

Date Written: June 19, 2012

Abstract

Given disparate beliefs about economic growth, technical change and damage caused by climate change, this paper starts with the seeming impossibility of determining a unique time profile of the social costs of carbon as a benchmark for climate negotiations and for infrastructure decisions that need to be made now in the absence of an inclusive international accord on climate policies. The paper demonstrates that determining a workable range of the social costs of carbon is however possible in a sequential decision-making framework that permits revising initial decisions in the light of new information. To do so, the paper exploits the results of a stochastic optimal control model run for more than 2000 scenarios that represent the set of beliefs presented about key uncertain parameters in the literature. The paper provides a heuristic mapping of the climate debate in the form of six 'clubs of opinions' and shows the possibility of determining a range of social costs of carbon that might permit a compromise between the maximum range of 'clubs' and those most likely to emerge in the future.

Keywords: optimal control, mitigation, social cost of carbon, uncertainty

JEL Classification: Q54, Q21, 041, D81

Suggested Citation

Perrissin Fabert, Baptiste and Dumas, P. and Hourcade, Jean-Charles, What Social Cost of Carbon? A Mapping of the Climate Debate (June 19, 2012). FEEM Working Paper No. 34.2012. Available at SSRN: https://ssrn.com/abstract=2087456 or http://dx.doi.org/10.2139/ssrn.2087456

Baptiste Perrissin Fabert (Contact Author)

Centre International de Recherche sur l’Environnement et le Développement (CIRED) ( email )

France

P. Dumas

CIRED ( email )

France

Jean-Charles Hourcade

CIRED, International Research Center on Environment & Development, France ( email )

Campus du Jardin Tropical
45 bis avenue de la Belle Gabrielle
F94736 Nogent sur Marne Cedex
France

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