Introduction to the Projects

The projects are running in parallel.
 
Project 1. ‘The Social Cost of Carbon (SCC) review – A closer look at the models, the estimates and the uncertainty’
 
This project will carry out a study of the social cost of carbon with a focus on exploring both the nature of uncertainties and the extent of consensus around both central estimates and a range of estimates. The approach will follow a risk assessment organised according to the uncertainty in climate change (from projections of reasonable confidence to bounded estimates of some climate parameters and large-scale effects that are not well understood) and confidence in the economic valuation of climate impacts (from market sectors that are well documented to non-market contingent valuation and socially contingent estimates related to ethical issues and differing value systems), as shown below.

Downing, T., and Watkiss, P. (2003). The Marginal Social Costs of Carbon in Policy Making: Applications, Uncertainty and a Possible Risk Based Approach. Paper presented at the DEFRA International Seminar on the Social Costs of Carbon. July 2003.

The project begins with a scoping and review phase that brings together existing estimates and lays out the risk-based analytical framework. The second phase updates the benchmark integrated assessment model, FUND and implements a novel expert knowledge elicitation technique to explore the structure of uncertainty in estimates of the social cost of carbon. A prototype multi-agent model will explore issues related to the social and institutional nature of adaptive capacity and exposure to climate impacts. The multi-agent model will be based on FUND.

Project 2. ‘The Social Costs of Carbon (SCC) Review - Methodological Approaches for Using SCC Estimates in Policy Assessment
 
The aim of the policy project is to inform Government on how best to incorporate social cost of carbon values in (current) relevant decision making contexts, given the uncertainty which will continue to surround attempts to monetise the global damage caused by carbon emissions.
 
The project will undertake the following tasks:

• It will investigate the previous use of the social cost of carbon values in policy assessment.
• It will investigate the possible approaches for using the SCC values in policy assessment, taking into account the key factors that influence the values (choice of discount rate, equity weighting, substitutability, time frame, uncertainty, etc).
• It will undertake stakeholder consultation with experts to obtain their views on how such analysis should be undertaken, and on the appropriate uses of SCC estimates in policy assessment in the face of uncertainty.
• It will develop a series of case studies to demonstrate the various approaches for including SCC estimates in policy decision-making, including dealing with uncertainty.

The results from this study, in conjunction with the results of the modelling assessment, will be used to reflect upon and make recommendations on how SCC estimates could best be incorporated in policy decision-making and assessment.