| Discount Rate and Statistic | ||||
|---|---|---|---|---|
| Emissions Year |
5% Average |
3% Average |
2.5% Average |
3% 95th Percentile |
| 2020 | 5800 | 18000 | 27000 | 48000 |
| 2025 | 6800 | 21000 | 30000 | 54000 |
| 2030 | 7800 | 23000 | 33000 | 60000 |
| 2035 | 9000 | 25000 | 36000 | 67000 |
| 2040 | 10000 | 28000 | 39000 | 74000 |
| 2045 | 12000 | 30000 | 42000 | 81000 |
| 2050 | 13000 | 33000 | 45000 | 88000 |
Multiplying the SC-GHG in year t by the change in emissions in year t yields the monetized value of future emission changes from a year t perspective. This value must then be discounted to the present before being included in an analysis. For this purpose, the monetized value of future emission changes should be discounted at the same rate used to calculate the initial SC-GHG to ensure internal consistency—i.e., future damages from climate change using the SC-GHG at 2.5 percent should be discounted to the base year of the analysis using the same 2.5 percent rate.
As noted above, to correctly assess the total climate damages to U.S. citizens and residents, an analysis must account for both the impacts that occur within U.S. borders and spillover effects from climate action elsewhere. For the reasons discussed in Section 2 above, estimates focusing on the climate impacts occurring within U.S. borders are an underestimate of the benefits of GHG mitigation accruing to U.S. citizens and residents and, therefore, are not equivalent to a domestic estimate of the SC-GHG. (Section 2 also discusses why analyses should center their attention on a global measure of the SC-GHG). Additionally, models differ in their treatment of regional damages[1] with one of the model developers recently noting that regional damages are “both incomplete and poorly understood” (Nordhaus 2017). The IWG further notes that the domestic focused SC-GHG estimates used under E.O. 13783[2] did not
- ↑ Both the PAGE and FUND model contain a U.S. region and so the damages for this region are reported directly for those models. The DICE 2010 model does not explicitly include a separate U.S. region in the model. For the domestic focused SC-GHG estimates used under E.O. 13783, the DICE model damages occurring within U.S. borders were approximated as 10 percent of the global estimate from the DICE model runs, based on the results from a regionalized version of the model (RICE 2010) reported in Table 2 of Nordhaus (2017). Although the regional shares reported in Nordhaus (2017) are specific to SC-CO2, they were also used in approximating the share of marginal damages from CH4 and N2O emissions occurring within U.S. borders. Direct transfer of the U.S. share from the SC-CO2 likely understate the U.S. share of the IWG global SC-CH4 estimates based on DICE due to the combination of three factors: a) regional damage estimates are known to be highly correlated with output shares (Nordhaus 2017, 2014), b) the U.S. share of global output decreases over time in all five EMF-22 based socioeconomic scenarios used for the model runs, and c) the bulk of the temperature anomaly (hence, resulting damages) from a perturbation in emissions in a given year will be experienced earlier for CH4 than CO2 due to the shorter lifetime of CH4 relative to CO2.
- ↑ For emissions occurring in 2020, the average estimates of marginal damages occurring within the U.S. borders for CO2, CH4, and N2O emissions across all model runs that were used in 2017–2020 regulatory analyses were $7/mtCO2,
