Science Magazine letter to the editor: “Social cost of carbon: Domestic duty” co-authored by GW RSC Director Susan E. Dudley

The National Academies of Sciences have assembled a committee to review the economic aspects of climate change in order to better estimate the social cost of carbon (SCC) (1). The SCC is an estimate in dollars of the long-term damage caused by a one-ton increase in global carbon emissions in a given year. Although the SCC oversimplifies a dauntingly complex reality, agreement on an SCC is necessary for cost-effective emissions controls (2). A key question is whether the SCC should reflect social costs to the United States or the entire world.

In 2013, an interagency group established the current federal SCC values — $43 per metric ton of CO2 in 2020 assuming a 3% discount rate — based on the estimated global SCC (3). Regulatory agencies use this global SCC as the sole summary measure of the value of reducing greenhouse gas emissions and compare it with estimates of domestic costs. This approach conflicts with long-standing federal regulatory policy directing agencies to issue regulations only upon a “reasoned determination” that the benefits “justify” the costs (4–6). A decision to issue a regulation with substantial domestic costs based on a finding that benefits to foreigners “justify” such costs would be irregular at best. Even with explicitly stated altruistic or strategic motivations (7), analyses that present only global benefits of regulations to reduce U.S. emissions would be misleading.

The federal government has a duty to inform Americans about the reductions in domestic climate damages that may result from federal regulation. The current approach of reporting only the global benefits neglects that duty. The National Academies of Sciences should refocus regulatory analysis of U.S. regulations on their domestic effects by recommending the use of a domestic SCC and supporting separate reporting of estimates of effects beyond the United States.

Authors

1. Art Fraas 1
2. Randall Lutter 2,1 *Corresponding author. E-mail: Lutter@rff.org
3. Susan Dudley 3
4. Ted Gayer 4
5. John Graham 5
6. Jason F. Shogren 6
7. W. Kip Viscusi 7

Author Affiliations

1. Resources for the Future, Washington, DC
2. Frank Batten School of Leadership and Public Policy, University of Virginia, Charlottesville, VA
3. The GW Regulatory Studies Center, The George Washington University, Washington, DC
4. The Brookings Institution, Washington, DC
5. School of Public and Environmental Affairs, Indiana University, Bloomington, IN
6. University of Wyoming, Laramie, WY
7. Vanderbilt Law School, Vanderbilt University, Nashville, TN

References

1. Board of Environmental Change and Society, Assessing Approaches to Updating the Social Cost of Carbon (The National Academies, Washington, DC, 2015–2016).
2. S. E. Dudley, B. Mannix Federalist Soc. Engage 15, 1 (2014).
3. Interagency Working Group on Social Cost of Carbon, Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (White House, Washington, DC,2013).
4. T. Gayer, W. K. Viscusi, “Determining the proper scope of climate change benefits” (Brookings Institution, Washington, DC, 2014).
5. Executive Order No. 13563, 76 Fed. Reg. 3821 (2011).
6. Executive Order No. 12866, 58 Fed. Reg. 51735 (1993).
7. W. Pizer et al., Science 346, 1189 (2014).