I would agree with this. My understanding is that the IAMs are so unmoored from reality as to be basically useless. They don’t try to account for the risk of catastrophic impacts, and the damage functions are chosen in part for mathematical tractability rather than fidelity to what climate change will actually be like. This is why I would object to claims such as “new research shows that the social cost of carbon is $477”.
This also seems like an area in which expert elicitation won’t be very accurate. We’re talking about impacts 100 years into the future for a problem heavily dependent on political developments which are extremely difficult to predict.
I agree that climate modelling is very uncertain, but we should not throw out the baby with the bathwater.
Quote from my analysis above:
“one study estimated a lower bound of the global social cost of carbon at US$125 and argues that:
“Quantifying the true SCC value is complicated because of various difficult-to-quantify damage cost categories and the interaction of discounting, uncertainty, large damages and risk aversion [...] The best that can be offered is a lower bound based comes from a conservative meta-estimate that aggregates studies using high and low discount rates, it does not account for various climate change damages owing to a lack of reliable information, and it does not consider a minimax regret argument addressing damages associated with extreme climate change.”
Also, as an aside, outside of prioritization, for optimal policy (e.g. carbon pricing) the social cost of carbon should be:
Set to the marginal abatement cost, which can be optimal and easier to estimate.[17] or
Set to err on the side of overestimating externalities[18] (while reducing other non-Pigovian taxes).”
I now include more optimistic estimates (in the sense that the SSC won’t be that high) in my sensitivity analysis.
I would agree with this. My understanding is that the IAMs are so unmoored from reality as to be basically useless. They don’t try to account for the risk of catastrophic impacts, and the damage functions are chosen in part for mathematical tractability rather than fidelity to what climate change will actually be like. This is why I would object to claims such as “new research shows that the social cost of carbon is $477”.
This also seems like an area in which expert elicitation won’t be very accurate. We’re talking about impacts 100 years into the future for a problem heavily dependent on political developments which are extremely difficult to predict.
I agree that climate modelling is very uncertain, but we should not throw out the baby with the bathwater.
Quote from my analysis above:
“one study estimated a lower bound of the global social cost of carbon at US$125 and argues that:
“Quantifying the true SCC value is complicated because of various difficult-to-quantify damage cost categories and the interaction of discounting, uncertainty, large damages and risk aversion [...] The best that can be offered is a lower bound based comes from a conservative meta-estimate that aggregates studies using high and low discount rates, it does not account for various climate change damages owing to a lack of reliable information, and it does not consider a minimax regret argument addressing damages associated with extreme climate change.”
Also, as an aside, outside of prioritization, for optimal policy (e.g. carbon pricing) the social cost of carbon should be:
Set to the marginal abatement cost, which can be optimal and easier to estimate.[17] or
Set to err on the side of overestimating externalities[18] (while reducing other non-Pigovian taxes).”
I now include more optimistic estimates (in the sense that the SSC won’t be that high) in my sensitivity analysis.