Research

Rather than facing an isolated climate change challenge, this paper argues that the world must confront the Global Energy Challenge (GEC) that requires all countries to make trade-offs between three often competing and interrelated goals: inexpensive and reliable energy, clean air, and limiting damages from climate change. This paper presents seven facts that help illuminate the contours of the GEC and the interactions between the three goals. It concludes by outlining potential solutions: pricing energy at its full social cost, investing in technical and policy innovation, improving information on pollution and climate damages, and treating energy as a private good.

The US Securities and Exchange Commission recently proposed a rule that would mandate that public companies report their greenhouse gas (GHG) emissions. This follows similar efforts in the European Union (EU) and United Kingdom. One rationale is that disclosure will provide information on material risks to investors, making it evident which firms are most exposed to future climate policies. In addition, some believe that reporting will galvanize pressure from companies’ key stakeholders (e.g., customers and employees), leading them to voluntarily reduce their emissions. This reasoning is in line with evidence for financial markets and disclosure mandates that form the third wave of environmental policy, which follows a wave of direct regulation and a wave of market-based approaches. But what might such disclosure reveal? We provide a first-cut preview of what we might learn about the climate damages caused by each company’s GHG emissions by drawing on one of the largest global datasets, which covers roughly 15,000 public companies.

Global sea level rise (SLR) may impose substantial economic costs to coastal communities worldwide, but characterizing its global impact remains challenging because SLR costs depend heavily on natural characteristics and human investments at each location—including topography, the spatial distribution of assets, and local adaptation decisions. To date, several impact models have been developed to estimate global costs of SLR, yet the limited availability of open-source and modular platforms that easily ingest up-to-date socioeconomic and physical data sources limits the ability of existing systems to transparently incorporate new insights. In this paper, we present a modular open-source platform designed to address this need, providing end-to-end transparency from global input data to a scalable least-cost optimization framework that estimates adaptation and net SLR costs for nearly 10,000 global coastline segments and administrative regions. Our approach accounts both for uncertainty in the magnitude of global SLR and spatial variability in local relative sea level rise. Using this platform, we evaluate costs across 110 possible socioeconomic and SLR trajectories in the 21st century. We find annual global SLR costs of $180 billion to $200 billion in 2100 assuming optimal adaptation, moderate emissions (RCP 4.5) and middle-of-the-road (SSP 2) socioeconomic trajectories. Under the highest SLR scenarios modeled, this value ranges from $400 billion to $520 billion. We make this platform publicly available in an effort to spur research collaboration and support decision-making, with segment level physical and socioeconomic input characteristics provided at https://doi.org/10.5281/zenodo.6449231, source code for this dataset at https://doi.org/10.5281/zenodo.6456115, the modeling framework at https://doi.org/10.5281/zenodo.6453099, and model results at https://doi.org/10.5281/zenodo.6014086.

Using 40 countries’ subnational data, we estimate age-specific mortality-temperature relationships and extrapolate them to countries without data today and into a future with climate change. We uncover a U-shaped relationship where extreme cold and hot temperatures increase mortality rates, especially for the elderly. Critically, this relationship is flattened by both higher incomes and adaptation to local climate. Using a revealed preference approach to recover unobserved adaptation costs, we estimate that the mean global increase in mortality risk due to climate change, accounting for adaptation benefits and costs, is valued at roughly 3.2% of global GDP in 2100 under a high emissions scenario. Notably, today’s cold locations are projected to benefit, while today’s poor and hot locations have large projected damages. Finally, our central estimates indicate that the release of an additional ton of CO2 today will cause mortality-related damages of $36.6 under a high emissions scenario and using a 2% discount rate, with an interquartile range accounting for both econometric and climate uncertainty of [-$7.8, $73.0]. Under a moderate emissions scenario, these damages are valued at $17.1 [-$24.7, $53.6]. These empirically grounded estimates exceed the previous literature’s estimates by an order of magnitude.

Since its release in 2010, the US government’s social cost of carbon (SCC) has played a central role in climate policy both domestically and internationally. However, rapid progress in climate science and economics over the past decade means that the original SCC estimate is no longer based on the frontier of scientific knowledge. Specifically, extensive new research about the climate, the economy, and their relationship has altered our understanding of the magnitudes of the projected physical and economic impacts of climate change, as well as their heterogeneity across space and time. This article, which was written as the Biden presidential administration was actively rebuilding the US SCC, provides concrete recommendations on how to base the SCC on the most recent research advances and thus return it to the scientific frontier.

It is my great pleasure to discuss this paper by Rennert and others that suggests a new approach for the US government to update the SCC. The authors’ approach emphasizes socioeconomic uncertainty and its correlation with damages. My goal in this comment is to situate their contribution in the broader context of a holistic approach to updating the US government’s SCC, underline drawbacks of the previous approach, and suggest criteria for the SCC calculation that makes it consistent with advances in the literature, economic theory, and policy objectives. Overall, my conclusion is that the authors have taken an important step in fixing what ails the SCC, but their improvements need to be digested and examined by the scientific community. Further, to this point, their solutions fail to exploit the advances in damage estimation, which many believe to be the area where the most progress has been made in the last ten to fifteen years. Overall, this is an important contribution but more is needed to return the US government’s SCC to the frontier of scientific understanding about climate damages.

Estimates of global economic damage caused by carbon dioxide (CO2) emissions can inform climate policy. The social cost of carbon (SCC) quantifies these damages by characterizing how additional CO2 emissions today impact future economic outcomes through altering the climate. Previous estimates have suggested that large, warming-driven increases in energy expenditures could dominate the SCC, but they rely on models that are spatially coarse and not tightly linked to data. Here we show that the release of one ton of CO2 today is projected to reduce total future energy expenditures, with most estimates valued between −US$3 and −US$1, depending on discount rates. Our results are based on an architecture that integrates global data, econometrics and climate science to estimate local damages worldwide. Notably, we project that emerging economies in the tropics will dramatically increase electricity consumption owing to warming, which requires critical infrastructure planning. However, heating reductions in colder countries offset this increase globally. We estimate that 2099 annual global electricity consumption increases by about 4.5 exajoules (7 per cent of current global consumption) per one-degree-Celsius increase in global mean surface temperature (GMST), whereas direct consumption of other fuels declines by about 11.3 exajoules (7 per cent of current global consumption) per one-degree-Celsius increase in GMST. Our finding of net savings contradicts previous research, because global data indicate that many populations will remain too poor for most of the twenty-first century to substantially increase energy consumption in response to warming. Importantly, damage estimates would differ if poorer populations were given greater weight.

There have been dramatic advances in understanding the physical science of climate change, facilitated by substantial and reliable research support. The social value of these advances depends on understanding their implications for society, an arena where research support has been more modest and research progress slower. Some advances have been made in understanding and formalizing climate-economy linkages, but knowledge gaps remain [e.g., as discussed in (1, 2)]. We outline three areas where we believe research progress on climate economics is both sorely needed, in light of policy relevance, and possible within the next few years given appropriate funding: (i) refining the social cost of carbon (SCC), (ii) improving understanding of the consequences of particular policies, and (iii) better understanding of the economic impacts and policy choices in developing economies.

This paper examines the temperature-mortality relationship over the course of the twentieth-century United States both for its own interest and to identify potentially useful adaptations for coming decades. There are three primary findings. First, the mortality impact of days with mean temperature exceeding 80°F declined by 75 percent. Almost the entire decline occurred after 1960. Second, the diffusion of residential air conditioning explains essentially the entire decline in hot day–related fatalities. Third, using Dubin and McFadden’s discrete-continuous model, the present value of US consumer surplus from the introduction of residential air conditioning is estimated to be $85–$185 billion (2012 dollars).

This paper combines panel data on monthly mortality rates of US states and daily temperature variables for over a century (1900-2004) to explore the regional evolution of the temperature-mortality relationship and documents two key findings. First, the impact of extreme heat on mortality is notably smaller in states that more frequently experience extreme heat. Second, the difference in the heat-mortality relationship between hot and cold states declined over 1900-2004, though it persisted through 2004. Continuing differences in the mortality consequences of hot days suggests that health motivated adaptation to climate change may be slow and costly around the world.

The social cost of carbon (SCC) is a crucial tool for economic analysis of climate policies. The SCC estimates the dollar value of reduced climate change damages associated with a one-metric-ton reduction in carbon dioxide (CO2) emissions. Although the conceptual basis, challenges, and merits of the SCC are well established, its use in government cost-benefit analysis (CBA) is relatively new. In light of challenges in constructing the SCC, its newness in government regulation, and the importance of updating, we propose an institutional process for regular SCC review and revision when used in government policy-making and suggest how scientists might contribute to improved SCC estimates.

In June, the Obama Administration unveiled its proposal for a Clean Power Plan, which it estimates would reduce carbon dioxide (CO2) emissions from existing U.S. power plants 30% below 2005 levels by 2030 (see the chart). Power plant emissions have declined substantially since 2005, so the plan is seeking reductions of about 18% from current levels. Electricity generation accounts for about 40% of U.S. CO2 emissions.

April 22nd is the 45th Earth Day, which marks the birth of the modern environmental movement that helped lead to the creation of the U.S. Environmental Protection Agency, the Clean Air Act Amendments, and the Clean Water Act. The result has been substantial improvements in environmental quality in the United States. Today, developing countries are contending with levels of pollution that are even higher than those in the United States before the first Earth Day. And in a period of considerable economic difficulty, the United States is trying to strike the right balance between the benefits and costs of further reductions in pollution.

The US government recently developed a range of values representing the monetized global damages associated with an incremental increase in carbon dioxide (CO2) emissions, commonly referred to as the social cost of carbon (SCC). These values are currently used in benefit–cost analyses to assess potential federal regulations. For 2010, the central value of the SCC is $21 per ton of CO2 emissions, with sensitivity analyses to be conducted at $5, $35, and $65 per ton of CO2 (2007 dollars). This article summarizes the methodology and interagency process used to develop these SCC values, offers our own commentary on how the SCC can be used to inform regulatory decisions, and identifies priorities for further research

Fisher et al. (2012) (hereafter, FHRS) have uncovered coding and data errors in our paper, Deschênes and Greenstone (2007) (hereafter, DG). We acknowledge and are embarrassed by these mistakes. We are grateful to FHRS for uncovering them. We hope that this Reply will also contribute to advancing the literature on the vital question of the impact of climate change on the US agricultural sector.

Using random year-to-year variation in temperature, we document the relationship between daily temperatures and annual mortality rates and daily temperatures and annual residential energy consumption. Both relationships exhibit nonlinearities, with significant increases at the extremes of the temperature distribution. The application of these results to “business as usual” climate predictions indicates that by the end of the century climate change will lead to increases of 3 percent in the age-adjusted mortality rate and 11 percent in annual residential energy consumption. These estimates likely overstate the long-run costs, because climate change will unfold gradually allowing individuals to engage in a wider set of adaptations.

This paper measures the economic impact of climate change on US agricultural land by estimating the effect of random year-to-year variation in temperature and precipitation on agricultural profits. The preferred estimates indicate that climate change will increase annual profits by $1.3 billion in 2002 dollars (2002$) or 4 percent. This estimate is robust to numerous specification checks and relatively precise, so large negative or positive effects are unlikely. We also find the hedonic approach—which is the standard in the previous literature—to be unreliable because it produces estimates that are extremely sensitive to seemingly minor choices about control variables, sample, and weighting.