Industrial Emissions photo from Shutterstock

A new study just published in the Journal of Environmental Studies and Sciences calculates that the U.S. government is using a faulty model for estimating the damages of carbon pollution, undervaluing its costs by a factor of between 2.6 and 12 times. The study, conducted by Laurie Johnson, chief economist at the Climate Center of the Natural Resources Defense Council (NRDC), and Chris Hope, reader and fellow at the University of Cambridge Judge Business School, shows that regulatory agencies are likely ignoring “the economic damages climate change will inflict on future generations,” Johnson writes on the NRDC staff blog.

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Official government estimates put the cost of carbon pollution at $21 per ton of carbon dioxide (CO2), says Johnson. But the new study faults the government estimates “for relying upon discount rates that are considered too high for intergenerational cost-benefit analysis, and for treating monetized damages equivalently between regions, without regard to income levels.” Johnson and Hope place the cost between $55 and $266 per ton, although Johnson cautions that “even these revised estimates may be too low,” as “they correspond to what might happen if future temperature increases are in the middle of scientists’ projections – not any of the worse-case scenarios they warn us about.”

The faulty government damage estimates have potentially serious consequences in terms of policy. Johnson writes that “The government’s approach matters a lot because its numbers are used to decide what actions should be taken now to fight climate disruption, such as the choice of what type of electric power we should build, which would change if more accurate estimates were used.”

+ Laurie Johnson at NRDC