### Abstract

Original language | English |
---|---|

Pages (from-to) | 75-94 |

Journal | Journal of Environmental Economics and Management |

Volume | 77 |

DOIs | |

Publication status | Published - May 2016 |

### Fingerprint

### Keywords

- climate change
- social cost of carbon
- integrated assessment models

### Cite this

*Journal of Environmental Economics and Management*,

*77*, 75-94. https://doi.org/10.1016/j.jeem.2016.01.005

}

*Journal of Environmental Economics and Management*, vol. 77, pp. 75-94. https://doi.org/10.1016/j.jeem.2016.01.005

**A simple formula for the social cost of carbon.** / van den Bijgaart, Inge; Gerlagh, Reyer; Liski, M.

Research output: Contribution to journal › Article › Scientific › peer-review

TY - JOUR

T1 - A simple formula for the social cost of carbon

AU - van den Bijgaart, Inge

AU - Gerlagh, Reyer

AU - Liski, M.

PY - 2016/5

Y1 - 2016/5

N2 - The social cost of carbon (SCC) is the monetized damage from emitting one unit of CO2 to the atmosphere, often obtained from computational Integrated Assessment Models (IAMs). We develop a closed-form formula that approximates the SCC for a general economy, and then explore the capacity of the analytical approach to capture the key SCC drivers and thus to replicate the results of the deterministic IAMs. The formula explains the parameter-driven SCC variation of a mainstream IAM without a systematic bias. The sensitivity analysis identifies and measures the performance limits of the closed-form formulas. We then use the analytic formula to structurally interpret a distribution of SCCs from deterministic IAMs, and develop an analytical breakdown and quantification of how different sets of parameters contribute to the SCC distribution. This allows the user of the formula to evaluate where particular parameter choices tend to place the resulting SCC outcome in the distribution of outcomes for the universe of deterministic IAMs.

AB - The social cost of carbon (SCC) is the monetized damage from emitting one unit of CO2 to the atmosphere, often obtained from computational Integrated Assessment Models (IAMs). We develop a closed-form formula that approximates the SCC for a general economy, and then explore the capacity of the analytical approach to capture the key SCC drivers and thus to replicate the results of the deterministic IAMs. The formula explains the parameter-driven SCC variation of a mainstream IAM without a systematic bias. The sensitivity analysis identifies and measures the performance limits of the closed-form formulas. We then use the analytic formula to structurally interpret a distribution of SCCs from deterministic IAMs, and develop an analytical breakdown and quantification of how different sets of parameters contribute to the SCC distribution. This allows the user of the formula to evaluate where particular parameter choices tend to place the resulting SCC outcome in the distribution of outcomes for the universe of deterministic IAMs.

KW - climate change

KW - social cost of carbon

KW - integrated assessment models

U2 - 10.1016/j.jeem.2016.01.005

DO - 10.1016/j.jeem.2016.01.005

M3 - Article

VL - 77

SP - 75

EP - 94

JO - Journal of Environmental Economics and Management

JF - Journal of Environmental Economics and Management

SN - 0095-0696

ER -