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Climate sensitivity, agricultural productivity and the social cost of carbon in FUND

January 6, 2020

The agricultural benefits of increasing levels of carbon dioxide are not being fully accounted for in current climate assessments.

From the abstract:

We explore the implications of recent empirical fndings about CO2 fertilization and climate sensitivity on the social cost of carbon (SCC) in the FUND model. New compilations of satellite and experimental evidence suggest larger agricultural productivity gains due to CO2 growth are being experienced than are refected in FUND parameterization. We also discuss recent studies applying empirical constraints to the probability distribution of equilibrium climate sensitivity and we argue that previous Monte Carlo analyses in IAMs have not adequately refected the fndings of this literature. Updating the distributions of these parameters under varying discount rates is infuential on SCC estimates. The lower bound of the social cost of carbon is likely negative and the upper bound is much lower than previously claimed, at least through the mid-twenty-frst century. Also the choice of discount rate becomes much less important under the updated parameter distributions.

Author
Kevin D. Dayaratna is Senior Statistician and Research Programmer in The Heritage Foundation’s Center for Data Analysis (CDA) and a Policy Advisor with the Heartland Institute.
Author
Patrick J. Michaels is a Senior Research Fellow for Policy and Economic Development at George Mason University.
pmichaels@cato.org