Society Needs To Better Understand Climate Change Economics

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In a new paper in the journal Science (as reported on Phys.org), a team led by Stanford professors Charles Kolstad and Marshall Burke argues that despite our growing knowledge of the physical science of climate change, relatively low funding for social science research has contributed to a knowledge gap about what climate change means for human society. This knowledge gap, they argue, renders the large advances in natural science less useful than they could be for policymakers.

The paper highlights three research questions with the greatest potential to close that gap:

  • What is the true cost of carbon emissions? The social cost of carbon (SCC) is a dollar value estimate of future social and economic damages caused by each present-day metric ton of carbon emissions. This figure is a key policy measure already being used in U.S. government regulations. However current SCC calculations leave out several important factors, such as the economic cost of extreme climate events or of “non-market” damages made worse by climate change, like deforestation or disease epidemics. The authors believe this is an area where rapid research progress is possible.
  • What emissions mitigation policies are best? There are many policy options for reducing carbon emissions, but the Stanford team believes we simply don’t know enough about them. With more research and a better understanding of the benefits and trade-offs of different carbon pricing options, governments can make a clear economic case for one policy over another instead of flying blind, like they do today.
  • What role do developing countries play? Most of the existing research on climate economics tends to focus on wealthy countries. We need better evidence on how climate change might impact developing countries and their climate policy choices.

The biggest roadblock, the authors agree, is funding. They urge collaboration among researchers and advise governments to strengthen long-term research funding. “Otherwise,” Kolstad said, “the large sums spent on natural science will be poorly targeted.”

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