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On the Uncertainty About the Total Economic Impact of Climate Change

Abstract

This paper uses a vote-counting procedure to estimate the probability density function of the total economic impact as a parabolic function of global warming. There is a wide range of uncertainty about the impact of climate change up to 3°C, and the information becomes progressively more diffuse beyond that. Warming greater than 3°C most likely has net negative impacts, and warming greater than 7°C may lead to a total welfare loss. The expected value of the social cost of carbon is about $29/tC in 2015 and rises at roughly 2% per year.

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This paper benefitted from discussions with and comments by David Anthoff, Trudy Ann Cameron, Bill Cline, Sam Fankhauser, Sean Lyons, David Maddison, Rob Mendelsohn, Bill Nordhaus, Steve Pacala, David Pearce, Katrin Rehdanz, Till Requate, Joel Smith, Jeremy Stein, Timothy Taylor, John Weyant and Gary Yohe. Three anonymous referees had excellent comments on an earlier version. The Climate Cost project (CEC DG Research FP7) provided welcome financial support. All errors and opinions are mine.

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Correspondence to Richard S. J. Tol.

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Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License (https://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Tol, R.S.J. On the Uncertainty About the Total Economic Impact of Climate Change. Environ Resource Econ 53, 97–116 (2012). https://doi.org/10.1007/s10640-012-9549-3

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Keywords

  • Climate change
  • Economic impact
  • Meta-analysis
  • Social cost of carbon

JEL Classification

  • Q54