Use and non-use value of nature and the social cost of carbon

Models used to calculate the costs of carbon emissions do not include ecological damages. This study expands an integrated assessment model to include natural capital as a form of wealth, and shows that accounting for the use and non-use value of nature has large implications for climate policy. Climate change is damaging ecosystems throughout the world with serious implications for human well-being. Quantifying the benefits of reducing emissions requires understanding these costs, but the unique and non-market nature of many goods provided by natural systems makes them difficult to value. Detailed representation of ecological damages in models used to calculate the costs of greenhouse gas emissions has been largely lacking. Here, we have expanded a cost-benefit integrated assessment model to include natural capital as a form of wealth. This brings benefits to people through non-use existence value and as an input into the production of ecosystem services and market goods. In our model, using central estimates for all parameters, optimal emissions reach zero by the year 2050, limiting warming to 1.5 degrees C by the year 2100. We used Monte Carlo analysis to examine the influence of several key uncertain model parameters, and examined the effect of adaptive investments in natural systems that partially offset climate damages. Overall, we show that accounting for the use and non-use value of nature has large implications for climate policy. Our analysis suggests that better understanding climate impacts on natural systems and associated welfare effects should be a high priority for future research.