Use and Non-Use Value of Nature and the Social Cost of Carbon
Research Seminars: SWEEEP SeminarClimate change is damaging ecosystems throughout the world with serious implications for human well-being. Quantifying the benefits of reducing emissions requires understanding these costs but the unique and non-market nature of many goods provided by natural systems makes them difficult to value. Detailed representation of ecological damages in models used to calculate the costs of greenhouse gas emissions has been largely lacking. Here the authors include natural capital as a form of wealth in a cost-benefit integrated assessment model and show that accounting for the use and non-use value of nature has large implications for climate policy. In their model, optimal emissions reach zero at the year 2050, limiting warming to 1.5°C by the end of the century, substantially lower than the standard model, which approaches 3°C by 2100. The paper shows that the cost of climate change could be alleviated by investments in natural capital and that capturing the effect of climate change on natural systems and the welfare effects of these changes should be a high priority for future research.
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