Accounting for Ocean Impacts Nearly Doubles the Social Cost of Carbon

This article argues that traditional measures of the social cost of carbon (SCC) have largely overlooked the impacts of climate change on "blue capital," which includes marine ecosystems and infrastructure. The authors integrated the latest ocean science and economic data into a climate-economy model to capture the repercussions for corals, mangroves, seaports, fisheries, and mariculture. This integrated approach estimates the welfare effects of these ocean-based damages on a global scale. By conceptualizing an "ocean-based SCC" or "blue SCC," the study identifies a massive component of climate damage currently missing from standard global indicators. The research emphasizes that the ocean is vital to a thriving society, supporting both market economies and non-market values like coastal protection.

The study finds that the inclusion of marine capital impacts leads to a dramatic increase in the estimated cost of carbon emissions. It highlights that blue capital is especially critical to low-income countries, where it represents a larger share of the national GDP compared to wealthier nations. Changes in ocean chemistry and physical conditions, driven by anthropogenic emissions, are directly threatening these essential resources. The model suggests that without accounting for these ocean-related impacts, policymakers are making decisions based on incomplete and significantly underestimated damage functions. This work advocates for a comprehensive "blue economy" framework that reflects the true interdependence of the environment and the global economy.

The 2020 blue SCC is estimated at US$48 per tCO2, which represents an almost doubling of the SCC estimate from the same model when ocean impacts are excluded. Under a lower discount rate of 2%, this blue SCC value increases significantly to US$168. The study also notes that the elasticity of substitution between blue capital components is the most influential parameter in these calculations. Furthermore, different Shared Socioeconomic Pathways (SSPs) result in varying temperature increases by 2100, such as 3.58 °C under SSP2 and up to 4.18 °C under SSP3. These figures illustrate the profound financial implications of failing to protect marine ecosystems.

Bastien-Olvera, Bernardo A., Octavio Aburto-Oropeza, Luke M. Brander, William W. L. Cheung, Johannes Emmerling, Francesco Granella, Massimo Tavoni, Jasper Verschuur, and Katharine Ricke. "Accounting for Ocean Impacts Nearly Doubles the Social Cost of Carbon." *Nature Climate Change* (January 2026). https://doi.org/10.1038/s41558-025-02533-5

Trends and Biases in the Social Cost of Carbon

Richard Tol provides an updated meta-analysis of the social cost of carbon (SCC), a central statistic used to justify climate policies by measuring the benefit of reducing CO2 emissions. The study explores how various ethical assumptions and model parameters, such as the pure rate of time preference, influence the final estimates. Tol notes that the literature is dominated by a relatively small, concentrated network of authors from a few specific countries. This concentration may introduce publication and citation biases that have historically pushed SCC estimates upward. The paper aims to refine the meta-database to provide a more accurate characterization of uncertainty in these economic projections.

The meta-analysis confirms that while SCC estimates have trended upward over time, they are characterized by a large and right-skewed uncertainty. This "thick tail" in the distribution means there is a non-negligible possibility of extremely high costs. Interestingly, the study finds that the social cost is much higher when climate change is assumed to affect economic growth rates rather than just the levels of output and welfare. Tol argues that while the total impact of a 2.5 °C warming is a factor, it is less influential than the underlying ethical views and discount rates chosen by researchers. The findings suggest a need for more diverse perspectives in the production of these influential climate-economy figures.

The central estimate of the social cost of carbon identified in this updated meta-analysis is approximately $200–250 per ton of carbon. When converted to carbon dioxide, this range equates to $700–900 per tCO2. The study specifically looks at the economic impact of a 2.5 °C warming as a benchmark for comparison. Furthermore, Tol examines the influence of citation networks, noting that the field's focus on a "small network of authors" can lead to biases that have pushed the social cost up beyond what a broader literature might suggest. These values provide a stark contrast to the lower estimates often used in older government policy assessments.

Tol, Richard S. J. "Trends and Biases in the Social Cost of Carbon." *Annals of the New York Academy of Sciences* (2025). https://doi.org/10.1111/nyas.15340

Costs and Benefits of Halving Nitrogen Waste for Global Sustainable Development Goals

Nitrogen waste is identified as a significant threat to global sustainable development, prompting the United Nations to propose halving such waste to reach Sustainable Development Goals (SDGs). This paper uses an integrated assessment framework to quantitatively link nitrogen waste to all 17 UN SDGs, moving beyond previous qualitative analyses. The waste streams include ammonia emissions, nitrous oxide, nitrogen oxides, and water runoff. These pollutants contribute to air and water degradation, soil acidification, and biodiversity loss. The research emphasizes the urgency of implementing management strategies to balance environmental, social, and economic targets by the year 2030.

The analysis concludes that halving nitrogen waste would result in a substantial improvement in global SDG performance. These improvements are driven by better human and ecosystem health as well as more effective climate change mitigation. The study also explores the cost-effectiveness of different control strategies, suggesting that policy choice is critical to the financial feasibility of these goals. While the total costs can be high, the societal benefits are projected to outweigh the expenditures in many scenarios. This research provides essential insights for policymakers looking to develop efficient nitrogen-reduction pathways.

The study reports that halving nitrogen waste could enhance global SDG performance by 19%. The total societal benefit of this reduction is estimated to be as high as US$1,379 billion. On the expenditure side, implementing these control strategies could cost up to US$1,137 billion. However, the authors note that by adopting more cost-effective strategies, these implementation costs could be decreased by up to 72%. These figures demonstrate a clear economic path forward for nitrogen management on a global scale.

He, Peiying, Xiuming Zhang, Chuanzhen Zhang, Binhui Chen, Sitong Wang, Luxi Cheng, Jinglan Cui, et al. "Costs and Benefits of Halving Nitrogen Waste for Global Sustainable Development Goals." *Nature Geoscience* (January 2026). https://doi.org/10.1038/s41561-025-01874-2

Hidden Costs of Repealing EPA's Carbon Pollution Standards

This issue brief analyzes the 2025 proposal by the U.S. Environmental Protection Agency (EPA) to repeal the Carbon Pollution Standards (CPS) for fossil-fired power plants. The authors evaluate the economic and environmental consequences of this deregulatory move, particularly in the context of the One Big Beautiful Bill Act (OBBBA). The stated goals of the repeal are to lower costs and meet rising electricity demand, but the brief argues these benefits may be illusory. Using the Haiku simulation model, the researchers updated demand projections to reflect the latest economic data. The study aims to reveal the "hidden costs" that an official cost-benefit analysis might overlook, such as unabated greenhouse gas emissions.

The findings suggest that the proposed repeal would actually fail a traditional cost-benefit test even before factoring in climate damages. This is largely due to updated electricity demand forecasts and changes in tax credits under the OBBBA. Repealing the standards is expected to slow the reduction of U.S. greenhouse gas emissions and lead to a resurgence in coal-fired power generation. The authors argue that the deregulatory agenda does not align with the economic realities of the modern power sector. Consequently, the repeal could lead to higher overall costs for society and households despite the administration's stated objectives.

The numeric analysis indicates that repealing the CPS would lead to an increase in coal generation of 169–456 TWh by 2040. This represents a generation level 4.8 to 8.7 times higher than would occur with the standards in place. The brief was published in August 2025 following the EPA's June proposal. The study utilized updated data to show that the repeal fails a traditional cost-benefit test when considering the integration of the OBBBA and new demand forecasts. These statistics highlight the significant shift in the U.S. energy trajectory that the repeal would trigger.

Roy, Nicholas, and Karen Palmer. "Hidden Costs of Repealing EPA's Carbon Pollution Standards: Consequences for the Environment, Households, and Society." *Resources for the Future Issue Brief 25-10* (August 6, 2025). https://www.rff.org/publications/issue-briefs/hidden-costs-of-repealing-epas-carbon-pollution-standards-consequences-for-the-environment-households-and-society/

Wildfire smoke and outdoor recreation welfare losses

Wildfire smoke has surged across the western United States, and this paper quantifies the per-trip welfare loss when campers confront smoky conditions. Using millions of campground reservations merged with day-by-day satellite smoke plumes and PM data, the authors estimate that smoke reduces welfare by $107 per person per trip, with larger losses when smoke persists for consecutive days.  From a back-of-the-envelope scaling, they infer that ~21.5 million outdoor recreation visits in the West are affected annually, implying aggregate welfare losses of about $2.3 billion per year purely on the recreation side—separate from health costs.  Although many smoke studies emphasize morbidity and mortality, this one zeroes in on revealed-preference behavior at high frequency, exploiting sequential decision-making as campers cancel, rebook, or stick with reservations as smoke forecasts evolve, which helps isolate causality in a way rarely possible with coarser data.  Importantly, the $107 estimate is per person, so party size and trip length compound damages quickly; it also varies with consecutive-day exposure, indicating nonlinear disutility as air quality remains poor.

Methodologically, the study deploys a novel control-function approach to capture evolving information and sequential choice, then links those structural decisions to satellite-based smoke and pollution metrics at the site-day level.  The identification gains power from tens of millions of administrative reservations covering multiple states and seasons, allowing them to detect how campers reallocate across sites and dates when smoke intrudes.  The welfare measures are based on standard discrete-choice valuation, but the key novelty is high-frequency exposure information, which captures the fact that smoke impacts are episodic and often abrupt, unlike the relatively smoother variation in annual PM averages.  The results imply that short-run recreation damages alone—again, ~$2.3 billion/year—are already material for public-lands management and visitor communication strategies, even before accounting for medical spending, lost productivity, or longer-run changes in park demand.

Contextually, this article sits alongside a growing literature showing that wildfire smoke now accounts for up to half of PM in some western locales, amplifying the urgency of smoke-specific preparedness and messaging on public lands.  The authors’ results also dovetail with evidence that recent fire seasons have been hotter, longer, and more severe, which suggests that $107 per-person trip losses may be a floor in extreme years.  Policymakers considering campground closure thresholds, reservation refund policies, or smoke-forecast integration into recreation apps can use the per-trip metric as a transparent, transferable input for cost-benefit analysis.  For example, the paper’s consecutive-day effect implies higher returns to rapid response (e.g., targeted closures or fee waivers) once forecasts indicate multi-day smoke. 

Jacob Gellman, Margaret Walls, and Matthew Wibbenmeyer. “Welfare Losses from Wildfire Smoke: Evidence from Daily Outdoor Recreation Data.” Journal of Environmental Economics and Management 132 (March 2025). https://www.sciencedirect.com/science/article/pii/S0095069625000506

The Impact of Physical Climate Risk on the Valuation of Global Equity

This article examines how physical climate damages (and tipping risks) propagate into the valuation of a global equity portfolio. Under plausible assumptions about weak abatement and the presence of low-threshold climate tipping points, the difference in shareholder value relative to a world without climate damages can exceed 40%, indicating that markets may be materially underpricing physical risk.  Conversely, prompt and robust abatement can hold losses to <10% even if tipping dynamics are present—an implied “benefit” of =30 percentage points in preserved equity value relative to delayed action scenarios.  The analysis stresses that the degree of abatement aggressiveness, the probability and temperature thresholds for tipping elements, and state-dependent discounting (i.e., lower rates in bad times) are the three levers that swing outcomes from “a few percentage points” to >40% valuation impairment.

Technically, the paper embeds physical-risk damages into forward-looking cash-flow and discount-rate assumptions for an equity index, then sweeps scenarios across tipping thresholds and abatement speed.  The authors note that if today’s equity prices already reflected realistic physical-damage paths, valuations would have to imply either extremely strong near-term abatement or negligible macroeconomic output effects from climate change; because neither assumption seems likely, they conclude there is “ample potential for equity revaluation.”  The findings are consistent with macro-damage projections in Nature that, even absent future emissions, the world economy is committed to a ~19% income reduction within ~26 years, with damages potentially ~50% larger when daily variability and extremes are included—context that reinforces the plausibility of large asset-price impacts.  The equity-valuation lens thus translates aggregate damage functions into investor-relevant losses, highlighting capital-market benefits from faster mitigation that curb the >40% downside tail.

From a policy and risk-management perspective, the paper’s “few percent to >40%” span is a sensitivity map for supervisors and asset owners: it shows how abatement policies (e.g., carbon pricing trajectories) and physical-risk governance (e.g., adaptation that reduces damage intensity) can materially shift valuation outcomes by double-digit percentages.  For strategic asset allocation, it suggests hedging and sector tilts that reduce exposure to climate-sensitive cash flows and tipping-point-amplified losses.  Taken together with EDHEC’s parallel synthesis showing that losses could exceed 50% with near tipping points (and <10% under timely abatement), the weight of evidence supports rapid mitigation as a financially prudent strategy.

Riccardo Rebonato, Dherminder Kainth, and Lionel Melin. “The Impact of Physical Climate Risk on the Valuation of Global Equity Assets.” Environmental and Resource Economics 88 (January 2025): 857–894. https://link.springer.com/article/10.1007/s10640-024-00953-z