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It Makes Sense to Measure Climate Change in Dollars and Cents

Unless you’ve been living under a rock, it’s impossible to ignore the effects of climate change in the news and across social media platforms. It’s a constant barrage of stories about pollutants in our atmosphere, higher temperatures everywhere, and stronger storms. 

While those are all treacherous outcomes due to human activity like driving fossil fuel vehicles and irresponsible manufacturing and farming practices, they seem more qualitative rather than quantitative. Meaning, they show how climate change affects our quality of life rather than the financial costs to our economy. 

But there’s actually a mathematical formula — a climate change calculation — that measures the cost of the damage in dollars when a ton of carbon dioxide is put into the atmosphere. And it’s called, the social cost of carbon

To scientists, the social cost of carbon basically means the effects of climate change that can be measured with data...ones that result in tangible costs to our way of life, like the changes in agricultural productivity (amount and quality of food), damages by rising sea levels (coastal cities underwater) and declines in health and labor productivity (decreased work output). Those are all costs that are real and meaningful to each and every one of us. 

In other words, the social cost of carbon shows us how much we need to sacrifice to avoid continued climates change, such as driving less, eating meat less frequently, and using less energy. When it comes down to it, the social cost of carbon is a benefit, meaning it’s what we avoid (continued climate change) by reducing carbon dioxide emissions.  

If the social cost of carbon is so important, then why aren’t we hearing about it in the news? Why such mystery? It’s like being told to use less electricity or water, so that’s what we try to do for the greater good. How can we contribute positively to the cause if we don’t know about it? 

The social cost of carbon may not be that commonly heard in the news, but it’s regularly used by policymakers to determine economic damages, economic impact, and benefits of environmental policies. The social cost of carbon has been used to calculate nearly 100 regulations in the United States in a cost-benefit analysis of specific policies.  

If the government is so concerned and regularly uses this calculation, then how can regular citizens get in on contributing to the cause? It’s easy and boils down to three common human-activity contributors: electricity, transportation and manufacturing. Basically, use less, drive less and buy less. 

The effects of those three contribute the majority of carbon emissions and their impact can be measured in the effects on agriculture, health and labor production. But it’s not the same worldwide. In the U.S., climate change affects health and labor productivity the most, whereas with agriculture, while vital, it’s a small share of our overall economic output. In other countries, it’s just the opposite.  

For labor productivity, work declines when the temperature gets hotter. And when it affects everyone in an economy, then those economy-wide effects are substantial. Hotter temperatures are also linked to heat stroke and heat-related deaths, as are homicides, suicides and traffic accidents.  

Surprisingly, even though we’re all breathing the same air and experiencing the same weather, the social cost of carbon doesn’t actually affect us all equally. The human health of those in lower-income communities are impacted disproportionately. The unequal climate impact to human health is referred to as environmental justice.  

When the temperatures rise above normal ranges, many are able to stay comfortable in their air-conditioned homes. That’s not the case for all, who then suffer heat-related conditions, such as heat stroke and asthma attacks. They also can’t afford air filters for wildfire smoke that has blanketed so much of the western United States over the past few years. There are environmental justice policies in the works to redistribute carbon tax revenue back to those areas, but it’s a difficult and complex process.  

While some effects of the social cost of carbon are fairly simple to tabulate, there are other areas of the economy where it’s more difficult. Jobs in the services category — from street vendors to business executives — are all affected to a certain degree from carbon emissions, but the analysis may be more difficult.  

One of the biggest hurdles to overcome with any major social change is society’s perception and our policy makers'  desire to create climate change policy. Regular citizens are now beginning to understand the effects of climate change from carbon dioxide. While some politicians are still supporting fossil fuels in their sectors, the vast majority are actively seeking opportunities to reduce greenhouse gas emissions and their impact on climate change, switch to renewable energy sources, and find alternatives to our daily habits that will also help the environment.  

The climate crisis may seem grim, and there are many uncertainties, but experts are actually optimistic about real change in the social cost of carbon. For one, the dramatic drop in cost of renewable solar and wind energy is making them viable options to more and more people. Consumers want more transparency, and people are joining group efforts to reduce climate change. Just like the global effort to combat COVID, we saw how groups around the world can effectively work together, and those same principles are being applied to reduce the social cost of carbon. 

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