Economics of climate change sensitivity analysis of social cost of carbon

Social cost of carbon (SCC) is the key concept in the economics of climate change. It measures the economic cost of climate impacts. SCC has influence on how beneficial it is to prevent climate change: if the value of SCC increases, investments to low-carbon technology become more attractive and...

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Main Author: Torniainen, Sami
Other Authors: Jyväskylän yliopiston kauppakorkeakoulu, Jyväskylä University School of Business and Economics, Taloustieteet, University of Jyväskylä, Jyväskylän yliopisto
Format: Bachelor's thesis
Language:eng
Published: 2016
Subjects:
Online Access: https://jyx.jyu.fi/handle/123456789/49967
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author Torniainen, Sami
author2 Jyväskylän yliopiston kauppakorkeakoulu Jyväskylä University School of Business and Economics Taloustieteet University of Jyväskylä Jyväskylän yliopisto
author_facet Torniainen, Sami Jyväskylän yliopiston kauppakorkeakoulu Jyväskylä University School of Business and Economics Taloustieteet University of Jyväskylä Jyväskylän yliopisto Torniainen, Sami Jyväskylän yliopiston kauppakorkeakoulu Jyväskylä University School of Business and Economics Taloustieteet University of Jyväskylä Jyväskylän yliopisto
author_sort Torniainen, Sami
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description Social cost of carbon (SCC) is the key concept in the economics of climate change. It measures the economic cost of climate impacts. SCC has influence on how beneficial it is to prevent climate change: if the value of SCC increases, investments to low-carbon technology become more attractive and profitable. This paper examines the sensitivity of two important assumptions that affect to SCC: the choice of a discount rate and time horizon. Using the integrated assessment model, we calculate SCC estimates with multiple discount rates and various time horizon lengths. Our results show that discount rate and time horizon have great effect on SCC. For example, the SCC estimates are drastically reduced under the use of a 10% discount rate versus 1% discount rate. Or, when dropping the end year of time horizon from 2300 to 2150, the SCC values decrease by average 12.8% per year. We conclude that if choosing different values of discount rate or time horizon, the outcome of the integrated assessment models can vary greatly.
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spellingShingle Torniainen, Sami Economics of climate change : sensitivity analysis of social cost of carbon Social cost of carbon climate change discount rate time horizon integrated assessment models Kansantaloustiede
title Economics of climate change : sensitivity analysis of social cost of carbon
title_full Economics of climate change : sensitivity analysis of social cost of carbon
title_fullStr Economics of climate change : sensitivity analysis of social cost of carbon Economics of climate change : sensitivity analysis of social cost of carbon
title_full_unstemmed Economics of climate change : sensitivity analysis of social cost of carbon Economics of climate change : sensitivity analysis of social cost of carbon
title_short Economics of climate change
title_sort economics of climate change sensitivity analysis of social cost of carbon
title_sub sensitivity analysis of social cost of carbon
title_txtP Economics of climate change : sensitivity analysis of social cost of carbon
topic Social cost of carbon climate change discount rate time horizon integrated assessment models Kansantaloustiede
topic_facet Kansantaloustiede Social cost of carbon climate change discount rate integrated assessment models time horizon
url https://jyx.jyu.fi/handle/123456789/49967 http://www.urn.fi/URN:NBN:fi:jyu-201605292740
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