- Home
- Report n°4: How Much to Spend for the Protection of Health and Environment
Report n°4: How Much to Spend for the Protection of Health and Environment
-
Table of contents
- Monetary Valuation
- Global Warming
- Monetary Valuation
Global Warming
The valuation of global warming damages is extremely complex, see for example Tol et al [2001]. Not only is the task difficult because of the large number of different impacts in all countries of the world that should be taken into account, but as these impacts will occur in future decades and centuries one needs to estimate how these costs will evolve into the distant future. On top of the resulting uncertainties there are controversial ethical issues related to the valuation of mortality in developing countries (where most of the impacts will occur) and the choice of the discount rate for intergenerational costs.
Several major studies have been published with estimates of the cost per ton of CO2eq (the subscript eq indicates that the result can also be used for other greenhouse gases if their masses are multiplied by their global warming potential (GWP)). Most of the results are in the range of 1 to 50 €/tCO2eq, the range being so wide because of the large uncertainties. The ExternE team carried out two valuation efforts, the first, in 1998, yielded a range of values with a geometric mean of 29 €/tCO2eq, the second, in 2000, obtained a much lower value of 2.4 €/tCO2eq because of more optimistic assumptions and a better accounting for benefits such as increased agricultural production in cold countries. The current phase of ExternE uses the value of 19 €/tCO2eq because that is the abatement cost in the EU implied by the commitment to the Kyoto protocol. It thus represents an implicit valuation by decision makers of the EU. It is also in effect the cost imposed on the EU by incremental emissions of CO2 in the EU. The choice of this value appears reasonable in view of the range of estimates published in the literature.