Risk aversion, time preference, and the social cost of carbon

D. Anthoff, R.S.J. Tol, G.W. Yohe

Research output: Contribution to JournalArticleAcademicpeer-review

149 Downloads (Pure)

Abstract

The Stern Review reported a social cost of carbon of over $300/tC, calling for ambitious climate policy. We here conduct a systematic sensitivity analysis of this result on two crucial parameters: the rate of pure time preference, and the rate of risk aversion. We show that the social cost of carbon lies anywhere in between 0 and $120 000/tC. However, if we restrict these two parameters to matching observed behaviour, an expected social cost of carbon of $60/tC results. If we correct this estimate for income differences across the world, the social cost of carbon rises to over $200/tC. © 2009 IOP Publishing Ltd.
Original languageEnglish
Article number024002
Pages (from-to)1-7
JournalEnvironmental Research Letters
Volume4
Issue number2-2
DOIs
Publication statusPublished - 2009

Fingerprint Dive into the research topics of 'Risk aversion, time preference, and the social cost of carbon'. Together they form a unique fingerprint.

Cite this