Social Benefit Of Carbon Is Ten To A Hundred Times The Estimated Social Cost

By Ed Caryl

We see many articles and posts about the Social Cost of Carbon (SCC) as an excuse for carbon taxes, but nothing about the Social Benefits of Carbon (SBC). The very reason civilization is consuming fossil fuels and producing carbon dioxide is ignored. Carbon-based fuels drive civilization and have done so since man’s taming of fire. They heat and light our homes and places of business, transport us and our goods, and fuel industry. All that energy production has value. Ignoring this value is as insane as if you only entered checks in your checkbook and ignored deposits.

There is great argument about the value of the SCC. The amounts are estimates based on the costs of production and future pollution and impacts primarily, and range from a few dollars per ton of CO2 to a few hundred dollars, depending on the computation method. Here are the U. S. government’s most recent figures:

table Social Cost of Carbon EPA

Table 1 from whitehouse.gov here.

But all these computations ignore the benefits attached to consuming carbon fuels. At first glance, it may seem difficult to put a value on benefits due to all the myriad ways that fossil fuels are used. Producing electricity is one use, and this was addressed in Boosting Per Capita Prosperity And Energy Consumption Is The Only Way To Care For Our Planet posted here in June 2013. But a more fundamental way to measure the prosperity that fossil fuels provide is to simply compare the per capita Gross Domestic Product (GDP) to the per capita CO2 emissions. The plot below uses data from the World Bank found here and here. The data from 2011 was used because that year had the most complete data.

Emission vs GDP

Figure 1 is a plot of emissions versus GDP for 189 countries for which the World Bank has data for 2011. Both axis are logarithmic scales. For a version of this graph with country labels and population, go to this link at GapMinder.

The outliers in Figure 1 are small countries with unusual circumstances, such as Luxembourg and Qatar (upper right). The United States is the dark blue dot at the upper right. The European countries are clustered to the left of the US. It is clear that a high GDP requires high emissions but it doesn’t answer the question as to the value of a tonne of CO2. The next plot answers that question by dividing the per capita GDP by the emissions per capita for each country and plotting that against per capita emissions.

The Social Benefit of Carbon

Figure 2. The vertical scale is the per capita GDP per metric tonne of CO2 emitted, this is the  Social Benefit of Carbon in each country. The horizontal scale is the CO2 emissions per capita. The large blue triangle on the right is the U. S. Both vertical and horizontal scales are logarithmic.

In figure 2, the first 19 countries on the left are in Africa, with very small emissions per capita but high GDP relative to those emissions. The European countries on the right have high emissions but most also have high GDP relative to those emissions. The three lowest GDP dots with high emissions are “‘stan” countries in central Asia. The social benefit of carbon for the 19 African countries is quite high because they use very little carbon now and would benefit greatly from using more. The U. S. SBC is $2,924.84. The country-average SBC of all the points in figure 2 is $3,774.75. The Social Benefit of Carbon is ten to a hundred times the estimated Social Cost of Carbon in Table 1.

The Excel spreadsheet that generated the above graphics is available here.

 

34 responses to “Social Benefit Of Carbon Is Ten To A Hundred Times The Estimated Social Cost”

  1. sod

    If we look at new data and at data time lines, it will become obvious that CO2 output and indexes of prosperity (like GDP) are decoupling and that the process is getting faster.

    This is easy to spot in Sweden:

    http://blogs.worldbank.org/climatechange/sweden-decoupling-gdp-growth-co2-emissions-possible

    But it is also happening on a global level:

    http://blogs.worldbank.org/climatechange/sweden-decoupling-gdp-growth-co2-emissions-possible

    If we go back in time enough (stoneage?) we can easily show, that an open fireplace in your cave is a sign of prosperity, and so we should not give up on open fire and living in caves…

    1. DirkH

      “If we go back in time enough (stoneage?) we can easily show, that an open fireplace in your cave is a sign of prosperity, and so we should not give up on open fire and living in caves…”

      Having a stack of firewood in ones garden means more prosperity than relying on a wind turbine driven electric heater. It means less freezing during blocking highs in Winter.

  2. sod

    And another interesting aspect: Using less fossil fuels is SAVING money.

    Energy efficency is helping a lot:

    http://www.businessgreen.com/bg/news/2429696/ten-billion-tonnes-co2-emissions-saved-thanks-to-energy-efficiency-over-past-25-years-says-iea

    And many countries do not have their own fossil fuels, so we are supporting other countries, in which the easy availability of fossil fuels is a big problem (getting rich with little work is a ultimate source of corruption and antidemocratic developments).

    1. Lonny Eachus

      But it seems your claims of possible decouplings, and savings, both depend on assumptions about the relative social and economic costs of CO2.

      If as the article suggests these assumptions are false your arguments fall right along with them.

      1. sod

        “But it seems your claims of possible decouplings, and savings, both depend on assumptions about the relative social and economic costs of CO2.”

        I do not think so. Ed is claiming a statistical connection: More CO2 means more prosperity/GDP.

        It is obvious, that this is no longer true, as GDP keeps growing in many countries while CO2 output is going down.

        There was a CO2 to GDP connection in the past, but it does no longer exist in developt nations and it is unclear if the connection will remain strong in countries catching up.

    2. DirkH

      “(getting rich with little work is a ultimate source of corruption and antidemocratic developments).”

      sod, that sounds like a description of a wind turbine owner.

  3. Fred Colbourne

    Thanks for this post. It’s intuitively obvious that the social benefits of CO2 emission are greater than the social costs.

    Glad to see that someone has quantified the benefits. Most benefit-cost studies / cost-benefit analyses (CBA) simply ignore the benefits.

    A New Zealand study ignored the global benefits but claimed that New Zealand would benefit as global warming drives up the price of agricultural products that NZ exports.

    The only CBA I have seen that fairly estimated social benefits was done for Quebec in which warmer summers and longer growing seasons were claimed as benefits.

    1. sod

      ” It’s intuitively obvious that the social benefits of CO2 emission are greater than the social costs.”

      I am curious: How much did those oil countries and the latest wars (Syria, Iraq) factor into your analysis of social costs of CO2?

      1. David Johnson

        Are you for real??

      2. DirkH

        While the wind turbinists bemoan the evils of modern mechanized warfare, they could learn a bit by looking into the way wars were fought before that time.
        https://en.wikipedia.org/wiki/Genghis_Khan

  4. Dr Adam Lucas

    Another issue that Ed doesn’t take into account is that increased GDP has not been correlated with increases in the standard of living for most people in developed countries since the early 1980s. GDP is generally accepted to not be a good indicator of quality of life, and it was never actually intended to be used that way, and yet here we are decades later and it is habitually used as such by neoliberal politicians and governments and neo-classical economists.

    1. P Gosselin

      This can be argued in different ways. How many poor people had a mobile phone/camera, computer and walking around with tons of data on a stick 30 years ago?

      1. sod

        “How many poor people had a mobile phone”

        In China, i saw very poor people (transporting dirty clothing down a mountain as a bundle on a traditional walking stick) using their mobiles.

        The smartphone has become the most important tool of most people and it can be easily loaded using solar power.

    2. DirkH

      “GDP is generally accepted to not be a good indicator of quality of life”

      Generally accepted by leftist journalists and wikipedia editors, you mean. Definitely not accepted by me. Don’t confuse mass propagation of a falsity to be acceptance by thinking people.

      Look for instance into The Skeptical Environmentalist by Bjorn Lomborg who shows that starting at a certain level of GDP/capita, countries become rich enough to clean up their environment.

      The USSR for instance never gave a crap for the environment – they were simply below this level.

      1. sod

        “Generally accepted by leftist journalists and wikipedia editors, you mean.”

        GDP is problematic. If a year has more cars being crashed and replaced, we will see a rise of GDP while prosperity is actually falling.

        If i waste an extra 1000$ (and growing) on oil to heat my badly insulated house each year, it gives an increase to GDP. If i use cheap insulation material to make me use less oil, i decrease the GDP while i actually increase my prosperity.

        GDP is an extremely bad indicator in the power sector, with so many externalities.

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