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How much should we spend reducing carbon emissions? What will the cost be if we don’t?

US federal lawmakers are required to consider the “social cost of carbon” when issuing significant rules, as part of their overall cost/benefit analysis. But how do they calculate it? The World Resources Institute and the Environmental Law Institute have issued a fascinating policy brief on the hidden assumptions and value judgments that drive the official numbers, currently a range whose “central value” is $21/ton. More Than Meets the Eye: The Social Cost of Carbon in US Climate Policy, in Plain English, shows that the beguiling concreteness of these numbers is a masquerade for choices made by a few unaccountable economists about issues such as:

  1. Which parts of climate science to put in their models; and at what levels of severity;
  2. Whether and how to include low probability, high impact catastrophes;
  3. Whether and how to put money values on non-monetary changes like species loss, crop shifts, human migration, disease, etc., and
  4. Especially, how much we discount the costs we impose on future generations. Do we sunnily assume that they will be much richer and technically adept than we, and so leave our problems to them? Or do we assume that the cumulative damage we are causing to the physical world will be enough to leave them, and that we should pay our own way?

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