The marginal impact of carbon dioxide under two scenarios of future emissions

Abstract

This paper uses the PAGE2002 model to calculate the marginal impact of carbon dioxide (CO2) under the A2 and B2 marker scenarios of the IPCC, and its distribution across regions, sectors, and over time. PAGE2002 considers the possibility of large-scale discontinuities, a major concern in the IPCC TAR. PAGE2002 estimates the mean value of the marginal impact for CO2 under scenario A2 to be $19 per tonne of carbon (tC), equivalent to $5 per tonne of CO2. The 95% and 5% values for the marginal impact are $49/tC and $5/tC. The mean value under scenario B2 is estimated to be $14/tC, with 95% and 5% points as $41/tC and $3/tC, respectively. The marginal impact is sensitive to the pure rate of time preference, and doubles for a 1% reduction from 3% to 2%. Additionally, adaptation policy affects the marginal impact estimates; they increase by 50% if no adaptation policy is implemented. Benefits from reductions in greenhouse gas emissions will affect the globe as a whole, but with various regions being more affected than others. Developing countries would receive about 50% of the benefit, whereas the European Union's benefits would be about 7%; only about 2% of the benefits would be felt in the USA. Benefits from an immediate reduction in CO2 emissions peak around the year 2100. About 60% of the benefits from reducing greenhouse gas emissions are non-economic, with economic and large-scale discontinuities being about 20% each. © 2005 Elsevier Ltd. All rights reserved.