Should the Social Cost of Carbon Be Higher​?

As the Trump administration slashes federal estimates of the future costs of climate change, new research suggests that even the much higher cost calculated by the Obama administration might be too low.

A new study indicates that properly accounting for the impacts on agriculture could substantially raise estimates of how much global warming will cost the world in damages. While higher levels of carbon dioxide may provide some benefits to plants, research increasingly suggests that the negative effects of rising temperatures will outweigh these advantages on a global scale. This means agriculture may suffer far greater losses in the future than previous estimates indicated. And accounting for these damages significantly raises the value of the social cost of the carbon, an oft-used federal metric that estimates the monetary costs associated with emitting climate-warming carbon dioxide into the atmosphere.

"I think this exercise, and the body of scientific evidence that it rests on, kind of show that, yes, while not every effect of climate change is negative—you do get benefits from CO₂ fertilization—the negative effects of warming in most areas more than cancel that out," said Frances Moore, an environmental economics expert at the University of California, Davis, and lead author of the new paper.

The study comes just one month after the Trump administration substantially lowered its federal estimate of the social cost of carbon (Climatewire, Oct. 25). First calculated by an Obama-era federal working group in 2009, the metric refers to the cost of emitting 1 ton of carbon dioxide into the atmosphere, given all the damage—to infrastructure, public health, etc.—that future climate change may inflict on human society. The metric has become a significant component of federal environmental policy, frequently applied in the cost-benefit analyses used to develop environmental regulations.

Under the Obama administration, estimates of the social cost of carbon came to about $36 per ton of carbon dioxide emitted. Last month, the Trump administration dramatically altered the methodology used to calculate the metric, bringing its value down to between $1 and $6 per ton.

But many scientists have said that even under the Obama administration, the social cost of carbon may have been set too low. The models used to calculate the metric relied on outdated assumptions about the impacts of climate change, some have said, meaning the economic damage associated with future warming may have been underestimated.

And a recent National Academies of Sciences, Engineering and Medicine report on the social cost of carbon, published earlier this year, also suggested that the methods used in the calculations may need improvement, recommending that the metric be frequently updated to reflect the latest available climate science.

This new study does just that, looking at the agriculture sector alone.

The federal social cost of carbon is typically calculated with the help of three models, which help project the economic damage likely to be incurred under future climate change. These models use slightly different methods, sometimes emphasizing different economic sectors of society, to make their calculations, and the final value for the social cost of carbon is a kind of average of the estimates produced by all three models.

Only one of these models explicitly accounts for climate impacts on agriculture, the authors of the new study note. But it relies on outdated research, they point out, when in fact scientists' understanding of climate change and agriculture has grown significantly over the last decade.

In particular, scientists have greatly improved their understanding of the balance between the potential benefits of more carbon dioxide and the potential disadvantages of changing temperatures or precipitation patterns around the world when it comes to growing crops. That's thanks to a variety of factors, according to Netra Chhetri, an expert on climate adaptation and food security at Arizona State University who was not involved with the new study.

For one thing, he noted, "a lot of early generation research came from the Western countries—and by very nature of their geography, they were in high-latitude regions where temperature was a major constraint for the production of crops." Now that more research is being conducted elsewhere around the world, scientists are beginning to understand that in many warmer regions, higher temperatures may have much more severe impacts on the production of food crops. Scientists are also conducting significantly more field studies on climate and agriculture than in years past, he said, and the models they use to make predictions about the future are continually improving.

In 2014, Chhetri and a group of colleagues conducted a meta-analysis of more than 1,700 existing studies on climate change and crop yields, which helped sum up all of the existing scientific knowledge in the field. For the new study, Moore and her co-authors—Uris Baldos and Thomas Hertel of Purdue University and Delavane Diaz of Stanford University—revisited some of that same body of literature.

With the help of maps and projections of global temperature change, as well as models, they were able to apply the findings from all the individual studies available to agriculture at a global scale. Then, they incorporated these updated global assumptions about climate change and agriculture into the model used to calculate the social cost of carbon.

Before their study, the model had suggested that climate impacts on agriculture would actually be a net benefit to the global economy, amounting to about $2.70 per ton of carbon dioxide emitted. But after updating the model with the latest science, the impact on agriculture changed to a total loss of about $8.50 per ton. When these losses were accounted for, the model's estimate of the social cost of carbon as a whole nearly doubled.

"This suggests that there's a lot of work to be done, and that it's possible and desirable to kind of build these damage functions on a more current scientific basis than they're currently built on," Moore said. While agriculture is not necessarily the only climate impact sector that may be in need of updating in the models, the new study constitutes a "first step," she added.

That said, the model updated in this study is only one of three typically used together to calculate the social cost of carbon. The other two don't account for agriculture so explicitly, lumping it in with various other economic sectors instead, Moore noted. In order to update these models, many different climate impact areas would likely need to be addressed at once—a task scientists may tackle in the future.

But the new study demonstrates the dramatic way the social cost of carbon may be affected simply by updating the science it relies on—the same type of update recommended earlier this year in the National Academies of Sciences, Engineering and Medicine report.

"I think we see this as a kind of first step in implementing the recommendations of the NAS report ... and it's demonstrating how this can be done in the agricultural sector," Moore said. "And the benefits you can see are that it's very clearly tied to science."

Reprinted from Climatewire with permission from E&E News. E&E provides daily coverage of essential energy and environmental news at www.eenews.net.