Previous Year Question
Which one of the following statements best describes the term “Social Cost of Carbon”? It is a measure, in monetary value, of the
long-term damage done by a tonne of CO₂ emissions in a given year
requirement of fossil fuels for a country to provide goods and services to its citizens, based on the burning of those fuels
efforts put in by a climate refugee to adapt to live in a new place
contribution of an individual person to the carbon footprint on the planet Earth
Correct Answer: A
Detailed Solution
The Social Cost of Carbon (SCC) is the estimated monetary value of the total future social damage caused by emitting one additional tonne of carbon dioxide in a particular year.
It can also be described as the marginal social cost of an additional tonne of carbon dioxide emissions.
Emitted CO₂ affects the climate system for a long period; therefore, its damage is not restricted to the year of emission.
The SCC converts SCC converts future damages into their present monetary value.
These damages may include illness and mortality caused by extreme temperatures, changes in agricultural productivity and reduced labour productivity.
Damage to coastal property, flooding, displacement and expenditure on coastal protection caused by sea-level rise may also form part of it.
Impacts on energy demand, water resources, extreme weather events, ecosystems and biodiversity may also be included in the assessment.
Integrated assessment models linking emissions, atmospheric concentrations, temperature changes and economic damages are used to estimate the SCC.
Its estimate depends upon climate sensitivity, future population and economic growth, the damage function and the social discount rate.
A lower discount rate gives greater importance to future damage and generally produces a higher Social Cost of Carbon.
The SCC can be used in the cost-benefit analysis of climate policies, emission standards and clean technologies.
If the per-tonne cost of an emission-reduction measure is lower than the SCC, its social benefits may exceed its cost.
The SCC is not itself a carbon tax or a market-determined carbon price, although it may help inform such policy values.
Option (b) describes a country’s fossil-fuel requirement, not the social damage caused by additional emissions.
Option (c) describes adaptation efforts following climate displacement, and option (d) describes an individual’s carbon footprint.