The marginal costs of climate changing emissions

R.S.J. Tol, T.E. Downing

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This paper presents the marginal costs of the emissions of a selected number of radiatively-active gases, three uniformly-mixed gases – carbon dioxide, methane, nitrous oxide – and two region-specific gases – nitrogen (from aircraft) and sulphur, which influence ozone and sulphate aerosol concentrations, respectively. The paper complements earlier research by adding a third model (FUND2.0), adding region-specific gases, and by presenting an alternative accounting framework. The discounting and valuation procedures for marginal cost estimation were refined, but the estimates for the three greenhouse gases do not substantially differ from those in earlier research. It should be noted that with the inclusion of new insights into the impacts of climate change, it can no longer be excluded that marginal costs are negative, particularly for methane. The sign of the costs is model and region dependent. Despite their short life-time, the marginal costs of nitrogen and sulphur emissions are relatively large, primarily because they are not much discounted. The results presented should not be taken as final estimates. The impacts covered by the models used are only a fraction (of unknown size) of all climate change impacts. Particularly, large scale disruptions, such as a breakdown of North Atlantic Deep Water formation or a collapse of the West-Antarctic Ice Sheet, are excluded from the analysis.
Original languageEnglish
Place of PublicationAmsterdam
PublisherInstituut voor Milieuvraagstukken
Publication statusPublished - 2004

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