Checking the price tag on catastrophe: The social cost of carbon under non-linear climate response. ESRI WP392, June 2011

Ceronsky, Megan and Tol, Richard S.J. and Anthoff, David and Hepburn, Cameron (2011) Checking the price tag on catastrophe: The social cost of carbon under non-linear climate response. ESRI WP392, June 2011. [Working Paper]

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Abstract

Research into the social cost of carbon emissions — the marginal social damage from a tonne of emitted carbon — has tended to focus on “best guess” scenarios. Such scenarios generally ignore the potential for low-probability, high- damage events, which are critically important to determining optimal climate policy. This paper uses the FUND integrated assessment model to investigate the influence of three types of low-probability, high-impact climate responses on the social cost of carbon: the collapse of the Atlantic Ocean Meridional Overturning Circulation; large scale dissociation of oceanic methane hydrates; and climate sensitivities above “best guess” levels. We find that incorporating these events can increase the social cost of carbon by a factor of over 3.

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