This paper provides an interesting discussion of how to calculate present value of CO2 mitigation, a calculation central to policy formulation and, hopefully, action: http://www.eenews.net/assets/2012/09/17/document_gw_05.pdf
Abstract In 2010, as part of a rulemaking on efficiency standards, the U.S. government published its first estimates of the benefits of reducing CO2 emissions, referred to as the social cost of carbon (SCC). Using three climate economic models, an interagency task force concluded that regulatory impact analyses should use a central value of $21 per metric ton of CO2 for the monetized benefits of emission reduc- tions. In addition, it suggested that sensitivity analysis be carried out with values of $5, $35, and $65. These estimates have been criticized for relying upon discount rates that are considered too high for intergenerational cost–benefit anal- ysis, and for treating monetized damages equivalently be- tween regions, without regard to income levels. We reestimate the values from the models (1) using a range of discount rates and methodologies considered more appro- priate for the very long time horizons associated with cli- mate change and (2) using a methodology that assigns “equity weights” to damages based upon relative income levels between regions—i.e., a dollar’s worth of damages occurring in a poor region is given more weight than one occurring in a wealthy region. Under our alternative dis- count rate specifications, we find an SCC 2.6 to over 12 times larger than the Working Group’s central estimate of $21; results are similar when the government’s estimates are equity weighted. Our results suggest that regulatory impact analyses that use the government’s limited range of SCC estimates will significantly understate potential benefits of climate mitigation. This has important implications with respect to greenhouse gas standards, in which debates over their stringency focus critically on the benefits of regulations justifying the industry compliance costs. -- You received this message because you are subscribed to the Google Groups "geoengineering" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/geoengineering?hl=en.
