Mark Budolfson

Over the past few decades, we have improved our understanding of the health impacts of climate change.1 Although many public health researchers have contributed to this knowledge, relatively few are aware of how their work may relate to the social cost of carbon. The social cost of carbon is a core economic concept in climate policy and one that can—and should—benefit directly from research produced by the public health community. The concept’s importance was recently highlighted by this past year’s Nobel Prize in Economic Sciences, which was awarded to William Nordhaus in part for his pioneering work developing models to estimate the social cost of carbon. Below we describe this concept, explain how it is calculated, and provide some brief guidance on how health research can improve its estimation.

Deciding which climate policies to enact, and where and when to enact them, requires weighing their costs against the expected benefits. A key challenge in climate policy is how to value health impacts, which are likely to be large and varied, considering that they will accrue over long time horizons (centuries), will occur throughout the world, and will be distributed unevenly within countries depending in part on socioeconomic status. These features raise a number of important economic and ethical issues including how to value human life in different countries at different levels of development, how to value future people, and how much priority to give the poor and disadvantaged. In this article we review each of these issues, describe different approaches for addressing them in quantitative climate policy analysis, and show how their treatment can dramatically change what should be done about climate change. Finally, we use the social cost of carbon, which reflects the cost of adding carbon emissions to the atmosphere, as an example of how analysis of climate impacts is sensitive to ethical assumptions. We consider $20 a reasonable lower bound for the social cost of carbon, but we show that a much higher value is warranted given a strong concern for equity within and across generations.

This paper asks about the climate damages that Indian policymakers can expect. What is the likely magnitude of climate damages, and how sensitive are they to the level of warming? How much worse would climate damages be for Indians under, say, 5° of warming rather than 3°? Understanding the magnitude of climate damages and how rapidly they increase as temperature change increases is critical for finding the right climate mitigation policy. This paper provides projections of India’s climate vulnerability on the basis of new microeconomic and macroeconomic evidence. The authors’ quantifications show that India is highly vulnerable to climate damage. Their baseline macroeconomic approach suggests that climate change peaking at 5°C, rather than 3°C, would be as detrimental to Indian well-being as a reduction in GDP by about 18 percent for each of the years from 2020 to 2040. Such an equivalent threat to near-term economic outcomes would be an overriding policy priority if political leaders anticipated it. The authors’ microeconomic results suggest that this may be an underestimate, because it ignores humidity. Emerging evidence suggests that humans are especially vulnerable to exposure to high temperatures in contexts of high humidity; humidity is a previously underappreciated and unquantified reason way in which India may be more climate-vulnerable even than some hotter developing and middle-income countries.

Animals, like humans, experience different levels of well-being depending on decisions made by others. As a result, the well-being of animals must be included in any full accounting of the well-being consequences of decisions. However, this is almost never done in large-scale policy and investment analyses, even though it is common to quantify the consequences for human welfare in these decision analyses. This is partly due to prejudice, but increasingly also because we do not currently have good methods for quantifying animal well-being consequences and putting them on the same scale as quantified human well-being consequences. We might call this ‘the problem of interspecies comparisons.’ This important barrier to including animal well-being in decision-making is the result of an insufficiently developed theory and practice of animal well-being and its relation to human well-being. This chapter explains the problem of interspecies comparisons, explains recent research that develops methods to overcome this problem.

Existing estimates of optimal climate policy ignore the possibility that carbon tax revenues could be used in a progressive way; model results therefore typically imply that near-term climate action comes at some cost to the poor. Using the Nested Inequalities Climate Economy (NICE) model, we show that an equal per capita refund of carbon tax revenues implies that achieving a 2 °C target can pay large and immediate dividends for improving well-being, reducing inequality and alleviating poverty. In an optimal policy calculation that weighs the benefits against the costs of mitigation, the recommended policy is characterized by aggressive near-term climate action followed by a slower climb towards full decarbonization; this pattern—which is driven by a carbon revenue Laffer curve—prevents runaway warming while also preserving tax revenues for redistribution. Accounting for these dynamics corrects a long-standing bias against strong immediate climate action in the optimal policy literature.

Reducing greenhouse gas emissions has the 'co-benefit' of also reducing air pollution and associated impacts on human health. Here, we incorporate health co-benefits into estimates of the optimal climate policy for three different climate policy regimes. The first fully internalizes the climate externality at the global level via a uniform carbon price (the 'cooperative equilibrium'), thus minimizing total mitigation costs. The second connects to the concept of 'common but differentiated responsibilities' where nations coordinate their actions while accounting for different national capabilities considering socioeconomic conditions. The third assumes nations act only in their own self-interest. We find that air quality co-benefits motivate substantially reduced emissions under all three policy regimes, but that some form of global cooperation is required to prevent runaway temperature rise. However, co-benefits do warrant high levels of mitigation in certain regions even in the self-interested case, suggesting that air quality impacts may expand the range of possible policy outcomes whereby global temperatures do not increase unabated.