'Cost of Carbon' Doesn't Include Some Climate Risks

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St. Paul's Cathedral is seen among the skyline through the smog in central London in this April 22, 2011 file photo. Close

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Photographer: Leon Neal/AFP via Getty Images

St. Paul's Cathedral is seen among the skyline through the smog in central London in this April 22, 2011 file photo.

Bloomberg BNA – The federal government's revised social cost of carbon figure is too low to adequately capture several social and economic harms posed by climate change, environmental groups said in a report released March 13.

The $37 per metric ton figure that federal agencies use to calculate the impact of climate change in their regulations is either missing or improperly quantifying the threats posed by increased risk of high-ozone days, drought, ocean acidification, loss of species and habitat and other impacts, according to the report, “Omitted Damages: What's Missing From the Social Cost of Carbon,” issued by the Institute for Policy Integrity, the Environmental Defense Fund and the Natural Resources Defense Council.

“The public picks up the tab for the types of extreme weather events that come more frequently with a changing climate—homes ruined, property values disintegrated, relief funding,” Gernot Wagner, a senior economist at the Environmental Defense Fund, said in a statement. “But the government is not fully assessing climate risks in its decision-making.”

The report recommends that federal agencies continue to use the $37 per metric ton of carbon dioxide figure while they reconsider the factors they use to determine the risk of climate change. The social cost of carbon is used to calculate impacts such as the net effects on damaged property, agriculture and human health from extreme weather linked to climate change for each metric ton of carbon dioxide emissions.

In November, federal agencies set the social cost of carbon at $37 per metric ton in 2007 dollars for 2015. That is up from the $24 per metric ton figure established in 2010.

The White House said the increase was the result of better data input into the models.

Harms Not Modeled

However, the report said that the revised carbon figure is limited by the models used by the interagency task force that reviewed the social cost of carbon. The models don't accurately reflect all of the harms posed by climate change. That may be because it is difficult to model the physical or economic harms caused by some effects of climate change, the report said.

“While the value of some environmental goods and services can be indirectly observed in market data (for example, housing sales) using revealed preference techniques, other environmental goods and services (for example, biodiversity) can only be valued using stated preference techniques; this latter group of environmental goods and services are more likely to be omitted,” the report said.

The Institute for Policy Integrity, the Environmental Defense Fund and the Natural Resources Defense Council launched the website http://costofcarbon.org/ to collect academic research on the social cost of carbon figure. The environmental groups argue that the revised social cost of carbon figure is too low to reflect the actual harms caused by climate change.

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