Technology and the Cost of Carbon
As mentioned in previous posts, I am working on an article criticizing Rennert et al., a recent Nature piece that calculates a cost of carbon by summing costs from now until 2300. One of my criticisms is that, given the rate of technological change in recent centuries, we have almost no idea what the world will be like in 2300, what features of the climate will be costs or benefits and by how much.
My initial idea was to cut off the calculation at some earlier date, perhaps 2100, but that introduces an arbitrary discontinuity as well as ignoring technological change earlier than that. A better and continuous solution, since the paper is producing a probability distribution rather than a single value, is to have the uncertainty of the costs increase over time. If the estimate, before allowing for technological change, is that cost in year t has a mean of Ct, a standard deviation of Ut, replace that with a mean of Ct, a standard deviation of Ct*e**(A*t), where A is a measure of how fast you believe uncertain technological change increases the uncertainty of the cost.
That would leave the mean of the total cost unchanged but increase the variance. If you think, as I do, that technological change will tend to reduce costs, for example because improved medicine reduces the effect of temperature on mortality, put in an additional factor of e**-(B*t).
How do you pick A and B? For B you could try to see how fast each category of cost calculated for a given amount of warming has decreased over time. Lay et. al., for example, reports the effect of calculating the mortality cost of a given amount of warming using numbers calculated with data from two periods thirty years apart; one could do something similar for other costs.
I don't have a good idea of how to calculate A, save that it should not be zero, as it implicitly is in Rennert.
This is a first pass at the problem. Perhaps commenters here can suggest a better way of incorporating uncertain technological change into a calculation of the social cost of carbon.