DAMAGES : What ’ s Missing From the Social Cost of Carbon

T he 2013 Interagency Working Group on the Social Cost of Carbon (IWG) updated the U.S. social cost of carbon (SCC) for 2015 from a central value of $24 to $37 using three integrated assessment models (IAMs): DICE-2010, FUND 3.8, and PAGE09. The SCC is the additional economic damage caused by one ton of carbon dioxide. While some have questioned the increase in the SCC as too high, a thorough examination of the latest scientifi c and economic research shows that $37 should be viewed as a lower bound. This is because the studies available to estimate the SCC omit many climate impacts—eff ectively valuing them at zero. Where estimates are available for a given type of impact, they tend to include only a portion of potential harms. This paper represents the fi rst attempt to systematically examine and document these omissions for the latest versions of the three IAMs used by the IWG, as well as earlier versions when they are used in calibrating the updated models. The table on the following page summarizes hot spot damages including increases in forced migration, social and political confl ict, and violence; weather variability and extreme weather events; and declining growth rates. A better accounting of catastrophic damages is also needed, as well as many other impacts. While there is a downward bias to the U.S. SCC estimates due to these omissions, the Offi ce of Management and Budget (OMB) and other executive branch agencies should move forward to fi nalize proposed rules with the 2013 IWG’s current SCC estimates, as measuring at least some of the costs of carbon dioxide is better than assuming they are zero. At the same time, the OMB should more thoroughly document downward biases of the current U.S. SCC estimates, potentially using this report to list in detail all of the currently omitted damages. OMITTED DAMAGES: What’s Missing From the Social Cost of Carbon 1 COSTOFCARBON.ORG 2 Missing or Poorly Quantifi ed Damages Needed to Improve SCC Models* General Impact Category Pages Health Respiratory illness from increased ozone pollution, pollen, and wildfi re smoke 30 Lyme disease 30 Death, injuries, and illnesses from omitted natural disasters and mass migration 30 Water, food, sanitation, and shelter 30 Agriculture Weeds, pests and pathogens 20 Food price spikes Note 83 Heat and precipitation extremes 41 Oceans Acidifi cation, temperature, and extreme weather impacts on fi sheries, species extinction and migration, and coral reefs 18-20, 41-42 Storm surge interaction with sea level rise 37-38 Forests Ecosystem changes such as pest infestations and pathogens, species invasion and migration, fl ooding and soil erosion 20 Wildfi re, including acreage burned, public health impacts from smoke pollution, property losses, and fi re management costs (including injuries and deaths) 20, 30 Ecosystems Biodiversity**, habitat**, and species extinction** 29 Outdoor recreation** and tourism 23 Ecosystem services** 27-28 Rising value of ecosystems due to increased scarcity 31-32 Accelerated decline due to mass migration 34