Loss-making expenditures for each year show a rise in CO2 emissions costs. A recent study by British economists indicates these rates are climbing by 2.2 percent annually. Each ton of CO2 released due to human activity is now far more damaging to the planet than it was a decade ago, according to research from the University of Sussex School of Business.
The researchers confirm that warming effects moving from 1.5C to 2C are far more impactful than the shift from 0.5C to 1C. The report notes a substantial increase in carbon costs across sectors from farming to health and beyond.
The findings appear in Nature Climate Change and draw on four decades of data and analysis.
The social cost of carbon represents the total economic burden a global economy bears from CO2 emissions and their damages. These costs arise from impacts on health and well-being, agricultural productivity, rising sea levels causing property damage, desertification, and shifts in energy use and labor productivity.
Economists urged to push for higher CO2 taxes
Examining more than 5,900 estimates from 207 papers published before 2022, the study employed innovative methods such as meta-analysis and found that economists should advocate higher carbon taxes and stronger climate policies. It notes that estimates of climate risk have grown more pessimistic over time.
Costs rise 2.2 percent annually
Professor Richard Tol of the University of Sussex School of Business explains that the social cost of carbon increases by 2.2 percent each year. The analysis shows that each ton of carbon is now four times more harmful than ten years ago.
The report highlights the need to intensify efforts to cut greenhouse gas emissions and to rethink the appropriate carbon price.
There is often a gap between stated emissions targets and the policies in place to meet them. In addition to raising the social cost of carbon and the recommended carbon price, policy makers should focus on increasing the real price of carbon and strengthening enforcement.
Therefore, the research supports stronger climate policy in Europe, North America, and other major economies, with attention to China and India to improve their climate strategies.
As noted by the researchers, estimates of the social cost of carbon vary with different assumptions about future emissions. Yet these forecasts have grown more pessimistic as climate change becomes a clear reality.
Reference article: Nature Climate Change, 2023, accessible through the publisher. Attribution: Nature Climate Change, 2023.
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