SCIENCE sciencemag.org Best cost estimate of greenhouse gases In March, President Trump’s Executive Order 13783 disbanded the Interagency Working Group on the Social Cost of Greenhouse Gases (IWG) (1). IWG devel- oped estimates for federal agencies to use in cost-benefit analyses of climate policies. IWG’s most recent central estimate was $50 in global damages per ton of carbon dioxide, based on year 2020 emissions, converted from 2007 to 2017 dollars (2). Trump’s Executive Order withdrew IWG’s official valuations and instead instructed agencies to monetize climate effects using “the best available science and economics” (1). Yet IWG’s estimates already are the product of the most widely peer-reviewed models and best available data (3). The Executive Order asks agencies to reconsider “appropriate discount rates” (the factor for converting future costs and benefits into present-day values) and “domestic versus international impacts” (1). These instructions implicitly question IWG’s choices to base central estimates on a 3% instead of a 7% discount rate (higher discount rates place less value on avoid- ing future damages) and to value global damages rather than ignore climate effects beyond U.S. borders. However, scientists and economists widely endorse these methodological choices. The National Academies of Sciences and the U.S. Council of Economic Advisers (4, 5) strongly support a 3% or lower discount rate for intergenerational effects. A 7% rate based on private capital returns is considered inappropriate because the risk profiles of climate effects differ from private invest- ments (6, 7). Most economists and climate policy experts [though not all (8)] also defend valuing the full global externalities of U.S. emissions to reinforce reciprocal climate policies in other countries (3, 4, 9). Moreover, current models cannot accu- rately estimate a domestic-only share of the social cost of greenhouse gases (4, 9). The social cost of greenhouse gases should be regularly updated, especially to reflect the latest evidence about damage functions (10). Meanwhile, government and private sector analysts should con- tinue using IWG’s central estimate of $50 per ton of carbon dioxide with con- fidence that it is still the best estimate of the social cost of greenhouse gases. R. Revesz, 1 M. Greenstone, 2 M. Hanemann, 3 M. Livermore, 4 T. Sterner, 5 D. Grab, 1 P. Howard, 1 J. Schwartz 1 * 1 Institute for Policy Integrity, New York University School of Law, New York, NY 10012, USA. 2 Department of Economics, University of Chicago, Chicago, IL 60637, USA. 3 Department of Agriculture and Resource Economics, University of California– Berkeley, Berkeley, CA 94720-3310, USA. 4 University of Virginia School of Law, Charlottesville, VA 22903- 1738, USA. 5 Department of Economics, University of Gothenburg, Gothenburg, SE-405 30, Sweden. *Corresponding author. Email: jason.schwartz@nyu.edu REFERENCES 1. Executive Office of the President, “Executive Order 13783: Promoting energy independence and economic growth,” Federal Register 82, 16093 (2017). 2. U.S. Interagency Working Group on the Social Cost of Greenhouse Gases (IWG), “Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866” (2016); https://obamawhitehouse.archives. gov/sites/default/files/omb/inforeg/scc-tsd-final- july-2015.pdf. 3. M. Greenstone, et al., Rev. Environ. Econ. Pol. 7, 23 (2013). 4. National Academies of Sciences, “Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide” (National Academies Press, 2017); www.nap.edu/download/24651. 5. U.S. Council of Economic Advisers, “Discounting for public policy: Theory and recent evidence on the merits of updating the discount rate” (2017); https://obam- awhitehouse.archives.gov/sites/default/files/page/ files/201701_cea_discounting_issue_brief.pdf. 6. P. Howard, D. Sylvan, “The Wisdom of the Economic Crowd: Calibrating Integrated Assessment Models Using Consensus” (2016); http://ageconsearch.umn.edu/ bitstream/235639/2/HowardSylvan_AAEA2016.pdf. 7. M. Greenstone, “What Financial Markets Can Teach Us About Managing Climate Risks,” New York Times (4 April 2017). 8. A. Fraas et al., Science 351, 569 (2016). 9. P. Howard, J. Schwartz, Columbia J. Environ. Law 42, 203 (2017). 10. A. Barreca et al., J. Polit. Econ. 124 , 105 (2016). 10.1126/science.aao4322 Published by AAAS on August 17, 2017 http://science.sciencemag.org/ Downloaded from INSIGHTS LETTERS