Project Report:
Ocean Acidification & Warming Implications for the Social Costs of Carbon
- Investigates the causes of economic imbalances.
- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.


In this project, CSE is preparing a peer-reviewed manuscript addressing one of the big gaps in the federal social cost of carbon (SCC) used by an increasing number of agencies in their decision-making and economic analysis – the costs of ocean acidification and warming (OAW). The manuscript will be published by Elsevier in an exciting new Major Reference Work: Encyclopedia of the Anthropocene, which will be available in 2017 in print, as an ebook and online on ScienceDirect and as part of the Reference Module in Earth Systems and Environmental Sciences. The manuscript will also be shared with the National Academies of Sciences and the Interagency Working Group on the Social Cost of Carbon (IWG) to help make the case that the social cost of carbon (SCC) needs to be substantially increased to reflect OAW damages, and that existing sources of information and methods are sufficient to do so.

Ocean Acidification & Warming Chart


Our manuscript, funded by a generous grant from the Alex C. Walker Foundation, will be entitled “Ocean Acidification and Warming: The Economic Toll and Implications for the Social Cost of Carbon” and will be the first to even attempt to assign economic cost estimates to many alarming scenarios suggested by existing scientific research on OAW. Some of the most worrisome scenarios include: (1) substantial reductions in net primary productivity; (2) a loss of at least 50% of all coral reefs; (3) an additional sea level rise of 3 meters by 2100 based on ocean warming induced melting of Antarctic ice sheets; (4) a loss of 25% of all charismatic marine species; (5) a 50% reduction in the ocean’s carbon sequestration capacity; (6) a 15% reduction in mangrove ecosystem extent; (7) 400 million people put at greater risk of food insecurity, and (8) an expansion of the area of marine dead zones by 50%.

Each of these effects can be assigned a cost using standard non-market valuation techniques. Likewise, standard techniques can be used to translate these into implied increments to the SCC needed to internalize the economic risks of OAW. Our manuscript will discuss three basic approaches the IWG can use. The first is based on federal agencies’ current approach for quantifying externalities from GHG emissions using the DICE integrated assessment model and economic damage functions suggested by existing literature. The second is a replacement or adaptation cost approach, which views SCC as a current capital investment liability that can be amortized over the adaptation time horizon. The third is an averted-risk approach based on willingness to pay to eliminate the risk of catastrophic changes, an approach that seems most compatible with worst-case scenario requirements under existing law.

Preliminary results were shared at the June, 2016 meeting of the Carbon Pricing Dialogue at the Brookings Institute in Washington, DC and suggested that global costs could top $20 trillion a year by 2100 and that the SCC should be adjusted upward by at least a factor of 2.

The paper was published in Feb. 2017. The abstract is copied below and the article is attached to this report.

Mounting evidence indicates that ocean acidification and warming (OAW) pose significant risks of systemic collapse of many critical ocean and coastal ecosystem services. Attention has been focused on the drastic reductions, if not extinction, of coral reefs, inundation of coastlines, massive ocean dead zones, collapse of both capture and subsistence fisheries in highly dependent regions and significant disruption of the ocean's carbon sequestration capacity. The economic costs of OAW have yet to be adequately researched or included in estimates of the social cost of carbon (SCC). This article summarizes current knowledge about the economic costs of OAW and suggests alternative approaches for incorporating these costs into the federal government's SCC. Preliminary results suggest that accounting for OAW would raise SCC 1.5–4.7 times higher than the current federal rate, to $60–$200 mt- 1 CO2-e.


Ostensibly, the SCC includes all known market and non-market costs, yet there are many categories missing or incomplete. One of the bigger holes is OAW and one of the justifications for its absence is the relative dearth of methods or data to quantify economic consequences and the assumption that such impacts are minor enough that society will be able to adapt. In our manuscript, we argue that such barriers need not restrain the government agencies participating in the SCC’s development and application from incorporating estimates for OAW based on the best available information and inclusive of high-impact but low probability scenarios – two factors that are baked into the regulatory framework for the SCC.


Once the paper is published, CSE will move into Phase II of this project, which is advocacy oriented. In particular, we will use our results to make the case to the IWG and the seven cabinet-level agencies or departments participating in the IWG that excluding OAW costs is arbitrary, and contrary to the regulatory mandate under which these departments operate. At this point in time it remains unclear if the new Trump Administration will change this, but for now, these departments and agencies are using the SCC in regulatory impact analyses and so any significant increases in its value should have a significant impact on the economic analyses they perform and, ultimately, decision making.

Information Dissemination

The policy venue for making our manuscript relevant is the National Academy of Sciences review process on the social cost of carbon. NAS has assembled an interdisciplinary committee of experts to review the latest research on modeling the economic aspects of climate change to inform future revision to the SCC estimates used in regulatory impact analyses. The study was requested by the IWG.

The committee’s work is proceeding in two phases: an interim report published in early 2016, and a final report in early 2017. The first phase will examine the advantages and challenges of potential approaches to a near-term narrow update to the SCC. The committee’s final report will examine potential merits of a range of alternative approaches to updating the SCC estimates, with the goal of ensuring that the estimates continue to reflect the best available science and evidence, and will highlight research priorities going forward. Our manuscript will be submitted to the NAS shortly, and if accepted into this process it will receive wide dissemination to researchers and policy makers engaged with the SCC.

Amount Approved
$50,000.00 on 1/22/2016 (Check sent: 2/3/2016)

Ocean Acidification & Warming Chart
OAW Thumbnail
Paper - Costs of Ocean Acidification and Warming (PDF)

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Dr. John Talberth
President and Senior Economist, Center for Sustainable Economy

Posted 1/18/2016 12:25 PM
Updated   2/18/2017 12:56 PM

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