Wilfried Rickels (Kiel Institute)
Emitting CO2 means borrowing common future wealth which has to be assessed against the private, country-specific accumulation of wealth arising from the increase of manufactured capital. Here we calibrate the integrated assessment model DICE to data on past economic and climate development to estimate the CO2 wealth borrowing, assessed with the social costs of carbon (SCC), for historical fossil and industrial-process CO2 emissions (between 1950 and 2018). We find that the present SCC (2018) of past emissions is practically independent of the year of emission. The reason is that there are two opposing effects of similar magnitude. Atmospheric CO2 concentration was lower in the past, so marginal damages were also lower. But due to discounting, earlier emissions are relatively more costly in terms of present values. Hence, we find an approximately linear relationship between past CO2 emissions and the wealth borrowing they have caused. Global aggregated borrowing in the form of CO2 emissions amounts to 50.1 (SD:1.2) trillion PPP USD (in 2017 prices) for the period from 1950 to 2018. This corresponds to 1.14 (SD:0.08) percent of cumulative manufactured capital investment. For USA and China, the wealth borrowing by their CO2 emissions make up 1.60(SD:0.11) and 2.27(SD:0.22) percent of their private cumulative manufactured capital investments, respectively. Starting the estimations from a later year than 1950, for some countries, including the USA, the cumulative borrowing has been increasing relative to cumulative investments, however, the trend has been reversed in China, an indication of China's gains in economic and population growth and efficiency.
Wilfried Rickels (Kiel Institute) — Felix D. Meier (Kiel Institute) — Martin F. Quaas (German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig)
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