Scandinavian Working Papers in Economics

Working Papers,
Örebro University, School of Business

No 2012:3: Temporal Aspects of the Social Cost of Greenhouse Gases

Disa Thureson ()
Additional contact information
Disa Thureson: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, Sweden, and VTI – The Swedish National Road and Transport Research Institute, Teknikringen 10, SE-102 15 Stockholm, Sweden

Abstract: The purpose of this study is to investigate the temporal aspects of the social cost of greenhouse gases (GHGs). I am particularly interested in the interaction between time of emissions, discounting, and type of GHG (where different GHGs have different atmospheric lifetimes). I show graphically how the social costs of GHGs depend on different parameter values and how the global damage potential for methane and sulfur hexafluoride evolves over time. I find that that the calculation period ultimately should be modeled to be consistent with the discount rate and that the “global-warming potential” concept is unsuitable for calculating of the social cost of GHGs other than carbon dioxide.

Keywords: Cost benefit analysis; Discount rates; Emissions pricing; Global warming potential

JEL-codes: Q54

14 pages, First version: February 27, 2012. Revised: February 1, 2016. Earlier revisions: April 3, 2012, September 4, 2012.

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