STANFORD, Calif., Jan. 12 (UPI) -- Economists trained in a wide range of traditions, from both ends of the political spectrum, agree that markets have failed to properly price carbon emissions. To account for the damage each ton of carbon dioxide does to the environment and atmosphere, economists and public policy makers suggest a tax on carbon -- a federally-backed market correction.
The idea is gaining steam in Washington, D.C. The only problem is that new research suggests the price that the federal government currently puts on a ton of CO2 -- the so-called "social cost" or carbon -- may be way too low.
Using the three most prominent pricing models, the government calculates the cost of each emitted ton of CO2 at $37. But scientists at Stanford say the current pricing models fail to account for all the economic damage each ton of CO2 causes near and longterm.
"We estimate that the social cost of carbon is not $37 per ton, as previously estimated, but $220 per ton," explained study co-author Frances Moore, a postdoc researcher at the Emmett Interdisciplinary Program in Environment and Resources in Stanford's School of Earth Sciences.
"If the social cost of carbon is higher, many more mitigation measures will pass a cost-benefit analysis," said co-author Delavane Diaz. "Because carbon emissions are so harmful to society, even costly means of reducing emissions would be worthwhile."
The central flaw in current pricing models, researchers say, is that the prediction mechanisms account only for the effects of environmental damages of economic output -- not economic growth.
"For 20 years now, the models have assumed that climate change can't affect the basic growth rate of the economy," Moore said. "But a number of new studies suggest this may not be true. If climate change affects not only a country's economic output but also its growth, then that has a permanent effect that accumulates over time, leading to a much higher social cost of carbon."
The study's authors are quick to point out where their research is lacking. Their prediction models doesn't account for the economic impact that climate change mitigation efforts might, and it's not ideal for trying estimate when and how less developed countries -- that may be more vulnerable to climate change -- should employ mitigation strategies. Per usual, more research is needed to work out such details.
"But this does not change the overall result that if temperature affects economic growth rates, society could face much larger climate damages than previously thought, and this would justify more stringent mitigation policy," Diaz concluded.
The new research was published this week in the journal Nature Climate Change.