By Jean Chemnick
“The resulting [social cost of carbon] presented here can only be described as a ‘partial’ estimate, with a potentially long upper tail,” wrote Gernot Wagner, a climate economist at Columbia Business School and one of the peer reviewers. “That fact needs to be clear and consistently presented throughout the report.”
In an interview, Columbia Business School’s Wagner said the “known unknowns” of climate change are part of the story and shouldn’t be written out of a climate accounting just because they involve uncertainty.
“We need to make sure that we are not just adding up the dollars and cents that we can currently calculate, but that we basically proxy for the risks that we cannot calculate,” he said.
The way to do that, he said, is to highlight the “fat tail” of the distribution of damages — the outcomes that have high cost but low probability. The White House-led effort on the social cost of greenhouse gases did that by disclosing a “95th percentile” estimate to show what climate damages could look like under a more extreme scenario. EPA didn’t do that.
Quoted in: “EPA’s carbon metric may underestimate climate damage — at least for now” by Jean Chemnick, ClimateWire/PoliticoPro (17 July 2023)