October 30, 2011

Estimates of the Social Cost of Carbon: Background and Results from the RICE-2011 Model

 by William D. Nordhaus

- We estimate the SCC using an updated version of the RICE-2011 model. The most important results are: First, the estimated social cost of carbon for the current time (2015) including uncertainty, equity weighting, and risk aversion is $44 per ton of carbon (or $12 per ton CO2) in 2005 US$ and international prices). Second, including uncertainty increases the expected value of the SCC by approximately 8 percent. Third, equity weighting generally tends to reduce the SCC. Finally, the major open issue concerning the SCC continues to be the appropriate discount rate.

William D. Nordhaus (2011). "Estimates of the Social Cost of Carbon: Background and Results from the RICE-2011 Model." NBER Working Paper No. 17540, Oct 2011.