Eliciting the Social Cost of Carbon

Project holder

Stefan Pollinger, Department of Economics - Sciences Po

Projects description

Global warming poses a difficult tradeoff to society: how much should we sacrifice the material needs of the current generation to reduce carbon emissions and their consequent climate damage to future generations? The economic literature has stressed a guiding principle for answering this question: the social cost of carbon. It is the present value of future damages caused by emitting one ton of carbon. Society should avoid all emissions with future damages that outweigh the current abatement cost. However, there is no consensus on how to discount these future climate damages, i.e., what the intergenerational discount rate should be. Therefore, disagreement on the value of the social cost of carbon persists, and the concept has not yet provided clear guidance for policymakers on the appropriate ambition of climate policy. Our project aims to provide estimates of the social cost of carbon and the intergenerational discount rate using a choice experiment. Our estimates will contribute to a better understanding of citizens' preferences for the intergenerational tradeoff posed by the climate crisis, providing valuable guidance for policymakers.