Working Paper: NBER ID: w31658
Authors: Marshall Burke; Mustafa Zahid; Noah Diffenbaugh; Solomon M. Hsiang
Abstract: Climate change is generating demonstrable harm around the world. Political and legal efforts have sought to associate climate impacts with specific emissions, including in recent international policy discussion of Loss and Damage (L&D). However, no quantitative definition of L&D exists, nor does there exist a framework for linking specific emissions to specific damages. Here we develop such a framework, linking it explicitly to recent efforts to calculate the social cost of carbon dioxide (SC-CO2), and demonstrate its use in a variety of applications. We calculate that future damages from past emissions, one component of L&D, are at least an order of magnitude larger than historical damages from the same emissions, a more commonly discussed component of L&D: 1 ton of CO2 emitted in 1990 causes $4 in global cumulative discounted damages by 2020 and an additional $327 in discounted damages through 2100 (2% discount rate). These estimates of past and future damages from marginal emissions can be used to calculate L&D for a range of specific emitting activities: for instance, an individual taking one long-haul flight every year for the past decade will generate ~$5500 in damages through 2100, the emissions associated with multiple oil majors between 1988-2015 have already caused $50-200B of cumulative global economic damage by 2020, and CO2 emissions in the US since 1990 have caused ~$2T in global damage through 2020, with India ($293B) and Brazil ($167B) being harmed the most. Carbon removal offers an alternative to transfer payments for settling L&D, but we show that it becomes increasingly ineffective in limiting damages as the delay between emission and recapture increases.
Keywords: climate change; loss and damage; social cost of carbon
JEL Codes: Q54; Q56
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| greenhouse gas emissions (Q54) | climate change damages (Q54) |
| 1 ton of CO2 emitted in 1990 (Q58) | $4 in global cumulative discounted damages by 2020 (F69) |
| 1 ton of CO2 emitted in 1990 (Q58) | $327 in global cumulative discounted damages by 2100 (J17) |
| damages from past emissions (Q54) | future damages from historical emissions (Q54) |
| emissions from specific activities (Q52) | quantifiable economic damages (K13) |
| damages caused by CO2 emissions (Q54) | future harm (K13) |