Country social cost of carbon estimates and their application to assess the natural land sink

Climate change damages vary across countries, because of regional variation in climate metrics like temperature and regional variation in economic exposure. This is evident in the breakdown of the social cost of carbon: the country social cost of carbon (CSCC). While for the former a large amount of estimates exists, only few studies provide information on the per country breakdown and among those few, empirically- derived estimates do not well align with model-based derived estimates. Here, we derive a new set of CSCC estimates consistent with macroeconomic growth theory which align with model-based estimates. We obtain a median estimate for the SCC of US dollars (US$) 167 per tCO2 (2020 prices, 66% CI: 39 to 312) for our main specification. India has the highest median CSCC (US$50 per tCO2 with 66% CI: 26 to 80), resulting from a relatively high GDP and relatively high projected temperature. Furthermore, we apply the CSCC estimates to assess the wealth contributions resulting from carbon sequestration in land ecosystems globally, nationally, and across borders. Countries both contribute to and benefit from sequestrationelsewhere, which is particularly relevant for designing payment schemes. Under a global agreement, Brazil for example would receive median US$202 ha−1 yr−1 for forest protection. In more plausible bilateral settings, India, the country with the highest CSCC, could offer Brazil a median payment of US$91 ha−1 yr− 1 to preserve primary forests.

Kiel Institute Experts