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UPSC Prelims 2020 · Environment · Rules for the Planet
Which one of the following statements best describes the term 'Social Cost of Carbon'? It is a measure, in monetary value, of the
- (a) long-term damage done by a tonne of CO₂ emissions in a given year.
- (b) requirement of fossil fuels for a country to provide goods and services to its citizens, based on the burning of those fuels.
- (c) efforts put in by a climate refugee to adapt to live in a new place.
- (d) contribution of an individual person to the carbon footprint on the planet Earth.
Show the answer and explanation
Answer: (a) long-term damage done by a tonne of CO₂ emissions in a given year.
The social cost of carbon is the money value of the long-term damage caused by emitting one more tonne of CO₂.
The idea
A factory that emits carbon does not pay for the harm it causes. Other people pay, later and elsewhere: lost crops, floods, heat illness, land lost to the sea. Economists call this an external cost. The social cost of carbon adds up all that future harm from one extra tonne and states it in money.
One extra tonne of CO₂ is emitted → It adds a little warming for many decades → Damage to farms, health, property, coasts → Future damage is converted to today’s money → One number per tonne
Why the others are wrong
(d) That is a personal carbon footprint.
Also know
Governments use the number to judge whether a climate rule is worth its cost and to decide how high a carbon tax should be. The result depends on the discount rate: if future damage is given more weight, the cost per tonne rises. A 2018 study that worked it out country by country found that India would bear the highest cost of any country.
🔒 Social cost of carbon = damage per extra tonne of CO₂ (used to set carbon prices).