The marginal costs of greenhouse gas emissions

Estimates of the marginal costs of greenhouse gas emissions are an importan t input to the decision how much society would want to spend on greenhouse gas emission reduction. Marginal cost estimates in the literature range bet ween $5 and $25 per tonne of carbon. Using similar assumptions, the FUND mo del finds marginal costs of $9-23/tC, depending on the discount rate. If th e aggregation of impacts over countries accounts for inequalities in income distribution or for risk aversion, marginal costs would rise by about a fa ctor of 3. Marginal costs per region are an order of magnitude smaller than global marginal costs. The ratios between the marginal costs of CO2 and th ose of CH4 and N2O are roughly equal to the global warming potentials of th ese gases. The uncertainty about the marginal costs is large and right-skew ed. The expected value of the marginal costs lies about 35% above the best guess, the 95-percentile about 250%.