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6 Regul. Rev. Depth 1 (2017)

handle is hein.journals/rgyrvidh6 and id is 1 raw text is: DETERMINING THE SOCIAL COST OF CARBON Jonathan Baront A recent article in Science warned that the incoming Trump Administration will try to revise the Social Cost of Carbon (SCC), a metric that federal agencies use for cost-benefit analysis of a variety of regulations concerning global warming.1 The current SCC is on the order of $50 per ton. Trump Administration officials could change two calculation assumptions to reduce the figure substantially: the discount rate and the geographic scope. A change in the 2020 discount rate from 2.5 percent to 5 percent could reduce the 2020 SCC from $62 to $12. A change in the geographic scope from the world, which is used now, to the United States alone could have similar if not larger effects. These two changes together could lead to estimates that would make many current regulations appear to have costs that exceed their benefits. In this essay, I take up the question of geographic scope in determining the SCC-and I will assume, for the sake of analysis, that monetary cost is the appropriate measure to measure the impact of emissions, even though money itself has different utility to different people as a function of their ability to pay for things. I also assess the effect of the discount rate.2 To begin, it is important to note that the regulation of carbon is done to prevent harm. It is analogous to the precautions that polluters take to prevent pollution. Tort law usually holds polluters liable if they are negligent in taking too little care. The usual test of negligence is that the care taken is less than optimal. Optimal care means that increases in care up to this point have greater benefit than cost, and increases beyond this point have greater cost than benefit. In other words, the benefit per dollar declines as the amount spent in care increases. t Professor of Psychology, University of Pennsylvania School of Arts and Sciences, and editor of the journal, Judgment and Decision Making. 1 See David Malakoff et. al., Trump Team Targets Changes to Key Metric that Calculates Social Cost of Carbon, Sci., Dec. 16, 2016, https://www.science.org/content/article/trump- team-targets-changes-key-metric-calculates-social-cost-carbon. 2 Jonathan Baron, The Discount Rate for the Social Cost of Carbon, REGUL. REV. (Jan. 18, 2017), https://www.theregreview.org/2017/01/18/baron-discount-rate-social- cost-carbon/.

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