The Social Cost of Carbon (SCC) is estimated by integrated assessment models and is widely used by government agencies to value the climate impacts of rulemakings, however, the core discussion around SCC so far was focused on validity of obtained numerical estimates and related uncertainties while largely neglecting a deeper discussion of the SCC applicability limits stemming from the calculation method. This work provides a conceptual mathematical background and the economic interpretation that is behind the SCC calculation in the three widely used integrated assessment models. Policy makers need to be aware of a subtle, but decisive difference between the actual and the commonly implied meanings of SCC that substantially limits its applicability as compared to the current practice .
The Social Cost of Carbon (SCC) is estimated by integrated assessment models and is widely used by government agencies to value the climate impacts of rulemakings, however, the core discussion around SCC so far was focused on validity of obtained numerical estimates and related uncertainties while largely neglecting a deeper discussion of the SCC applicability limits stemming from the calculation method. This work provides a conceptual mathematical background and the economic interpretation that is behind the SCC calculation in the three widely used integrated assessment models. Policy makers need to be aware of the difference between the commonly implied and the actual meaning of SCC that substantially limits its applicability in practice. The presented results call for a critical revision of the SCC concept and the SCC calculation methods in integrated assessment models .
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a subtle, but decisive
the
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actual and the commonly implied meanings
commonly implied and the actual meaning
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as compared to the current practice
in practice. The presented results call for a critical revision of the SCC concept and the SCC calculation methods in integrated assessment models