At the peak of the Great Recession, there were stimulus programs such as “Cash for Clunkers”. Environmental economists wrote papers documenting that the Social Cost of Carbon would need to be over $200 to justify such programs based on carbon abatement. Today, I have learned that the Social Cost of Carbon may actually be that high (see Robert Pindyck's new paper). Dr. Pindyck presents a new survey of experts who have answered his questions about the SCC.
I need to read this paper carefully but I have 3 thoughts.
A. The experts must be aware of how Dr. Pindyck will use their answers. Thus, they have an incentive to inflate them.
B. How do these respondents factor in future adaptation progress? Won't this reduce the social cost of carbon? The social cost of carbon should be the expected present discounted value of aggregate social damages caused by releasing an extra ton of carbon dioxide emissions.
C. His general approach of focusing on expert opinion for valuing the environment mirrors what Dan McFadden recommended 20 years ago in the context of Contingent Valuation. McFadden, when considering how much damage is caused by oil spill, wanted to survey experts and base “damage estimates” on their surveyed beliefs.