Liabilities for the social cost of carbon

TL;DR

This paper provides updated, country-specific estimates of the social cost of carbon and introduces inter-country net liability as a key concept for climate accountability. It integrates Tol (2024) meta-analytic insights with a standard integrated assessment model, weighting multiple impact functions via Bayesian model averaging, and it computes a blame matrix to derive country-level liabilities. The central finding is that net liability is positive for a set of middle-income, carbon-intensive economies and negative for the poorest and richest countries, with historical debt patterns reinforcing the same qualitative distribution. The work highlights the potential for liability-based compensation mechanisms and discusses policy and equity considerations, including the Lindahl pricing approach and the sensitivity of results to assumptions about vulnerability, discounting, and climate response.

Abstract

We estimate the national social cost of carbon using a recent meta-analysis of the total impact of climate change and a standard integrated assessment model. The average social cost of carbon closely follows per capita income, the national social cost of carbon the size of the population. The national social cost of carbon measures self-harm. Net liability is defined as the harm done by a country's emissions on other countries minus the harm done to a country by other countries' emissions. Net liability is positive in middle-income, carbon-intensive countries. Poor and rich countries would be compensated because their current emissions are relatively low, poor countries additionally because they are vulnerable.

Figures (16)

• Figure 1: Economic impacts of climate change
• Figure 2: The external cost imposed by each country plotted against the external cost imposed on each country.
• Figure 3: Net liability plotted against per capita income.
• Figure 4: Net liability: Sensitivity analysis.
• Figure 5: Net liability: Further sensitivity analysis.