User:Imanrahul/sandbox

Planned edits for CBE195
My group, consisting of Jeremy, Janine, and, Meredith plan to edit the following Wikipedia pages/sections:

https://en.wikipedia.org/wiki/Carbon_tax#Social_cost_of_carbon

https://en.wikipedia.org/wiki/Carbon_tax#United_States

https://en.wikipedia.org/wiki/Economics_of_climate_change_mitigation#Discount_rates

The following is a brief description of the edits we plan to make:

In carbon tax page under United States tab

 * Internal Price on Carbon: We will talk about the internal price of carbon used by companies in the United States. Companies in the United States use their own cost of carbon to anticipate future government regulations which may levy an internal price of carbon on their business while planning their operations
 * Timeline of how social cost of carbon is being implemented in the United States.

In carbon tax page under social cost of carbon tab
https://en.wikipedia.org/wiki/DICE_model We hope to connect the DICE model and its implications to how countries set the social cost of carbon
 * Dynamic Integrated Climate Economy Model (DICE)

In economics of climate change mitigation page under discount rates tab

 * Elaborate more on what a high and low discount rate entails. Effect on current and future generations, and assumptions made to support a high or low discount rate.

Social cost of carbon
The social cost of carbon (SCC) is the marginal cost of the impacts caused by emitting one extra tonne of carbon (as carbon dioxide) at any point in time, inclusive of ‘non-market’ impacts on the environment and human health. The concept of a social cost of carbon was first mooted by the Reagan administration in 1981. The initial purpose of putting a price on a ton of emitted CO2 was to aid policymakers in evaluating whether a policy designed to curb climate change is justified. An intuitive way of looking at this is as follows: if the price of carbon is $50 per tonne in 2030, and we currently have a technology that can reduce emissions by 1 million metric tonnes in 2030, then any investment amount below $50 million would make economic sense, while any amount over that would lead us to consider investing the money somewhere else, and paying to reduce emissions in 2030.

Calculating the SCC requires estimating the residence time of carbon dioxide in the atmosphere, along with estimating the impacts of climate change. The impact of the extra tonne of carbon dioxide in the atmosphere must then be converted to equivalent impacts on climate and and human health, as measured by the of amount of damage done and the cost to fix it.. In economics, comparing impacts over time requires a discount rate. This rate determines the weight placed on impacts occurring at different times.

Best estimates of the SCC come from Integrated Assessment Models (IAM) which predict the effects of climate change under various scenarios and allow for calculation of monetized damages. One of the most widely used IAMs is the Dynamic Integrated model of Climate and the Economy (DICE).

The DICE model, developed by William Nordhaus, makes provisions for the calculation of a social cost of carbon. The DICE model defines the SCC to be “equal to the economic impact of a unit of emissions in terms of t-period consumption as a numéraire.”

The SCC figure computed in 2015 is $31.2 per ton of CO2 for emissions, this amount will rise 3% in real terms, to account for inflation till 2050. Estimates of the dollar cost of carbon dioxide pollution is given per tonne, either carbon, $X/tC, or carbon dioxide, $X/tCO2. One tC is roughly equivalent to 3.7 tCO2.

According to economic theory, if SCC estimates were complete and markets perfect, a carbon tax should be set equal to the SCC. Emission permits would also have a value equal to the SCC. In reality, however, markets are not perfect, SCC estimates are not complete, and externalities in the market are difficult to calculate accurately, resulting in an incorrect amount priced for the carbon tax (Yohe et al.., 2007:823).

Estimates of the SCC are highly uncertain. Yohe et al. (2007:813) summarized the literature on SCC estimates: peer-reviewed estimates of the SCC for 2005 had an average value of $43/tC ($12/tCO2) with a standard deviation of $83/tC. The wide range of estimates is explained mostly by underlying uncertainties in the science of climate change (e.g., the climate sensitivity, which is a measure of the amount of global warming expected for a doubling in the atmospheric concentration of ), different choices of discount rate, different valuations of economic and non-economic impacts, treatment of equity, and how potential catastrophic impacts are estimated. One specific issue arises over coming to a consensus on what discount rate to use. Some, like Nordhaus, advocate for a discount rate that is pegged to current market interest rates, as we should treat efforts to reduce carbon dioxide emissions just like we treat any other economic activity. Others, like Stern, propose a much smaller discount rate because "normal" discount rates are skewed when applied over the time scales over which climate change acts. As a result, other estimates of the SCC spanned at least three orders of magnitude, from less than $1/tC to over $1,500/tC. The true SCC is expected to increase over time. The rate of increase will very likely be 2 to 4% per year. A recent meta-analysis of the literature on the estimates of the social costs of carbon, however, finds evidence of publication bias in favor of larger estimates.