A Lower Bound: Why the Social Cost of Carbon Does Not Capture Critical Climate Damages
The Social Cost of Carbon, developed by the Obama-era Interagency Working Group (IWG), is the best available tool for measuring the economic damages from greenhouse gas emissions. It has been used in analysis for over 100 federal regulations that affect greenhouse gas emissions, as well as by a number of states in electricity and climate policy. Still, many significant impacts identified by the Intergovernmental Panel on Climate Change are difficult to quantify and so have been omitted from the IWG SCC estimates. Impacts such as increased fire risk, slower economic growth, and large-scale migration are all unaccounted for, despite their potential to cause large economic losses. Our new issue brief discusses these omissions and other variables that will influence climate outcomes. We encourage policymakers to account for this likely underestimate by viewing the SCC as a lower bound for damages.