Researchers Say the Social Cost of Carbon Will Be 6 Times the Obama Administration's Estimate

Climate change could have much larger impacts on the economy than the U.S. government is anticipating, according to an analysis released yesterday that suggests the social cost of carbon should be six times higher.

A paper by two Stanford University researchers argues that the true cost of releasing greenhouse gases is about $220 a ton because rising temperatures could badly hinder a nation's economic growth over decades or centuries.  The Obama administration estimates that the social cost of carbon is $37 a ton.

The paper, published yesterday in the journal Nature Climate Change, adds to a growing number of voices calling for improvements to the complicated process of establishing the cost estimate, which is used to measure the benefits of regulations.  A dozen federal agencies set the price using three computer models that project emission rates, economic activity and climate damages.

The Stanford paper bases its findings on prior research showing that the economic health of a country suffers during periods of high temperatures.  Heat can harm agricultural and industrial output, while increasing political instability.  In that way, the Stanford analysis subscribes to emerging calls among experts to incorporate new observations into the trio of models that date back to the 1990s.

"The social cost of carbon is almost certainly larger of what's being used so far," said co-author Frances Moore, a doctoral candidate at Stanford's School of Earth Sciences.

In a key departure from the government's analysis, the paper uses the previous empirical research to assert that climate impacts could damage a nation's economic growth rate over time, rather than just harassing its year-to-year economic output.

That could mean that nations face permanent malfunctions, like economic declines in labor, capital and technology from severe weather and other "temperature shocks."  The authors say these bigger impacts have a "compounding effect" that is more damaging to the economy than temporary strains from heat on agricultural output and more expensive air conditioning costs.

"So the economy is kind of permanently lower," Moore said.  "If you have repeated shocks, in that case, they accumulate over time.  That's why even very, very small reductions in growth rates have these really big effects over time."

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