Urban and non-urban contributions to the social cost of carbon
06.05.2025
Francisco Estrada (Instituto de Ciencias de la Atmósfera, Universidad Nacional Autónoma de México, Institute for Environmental Studies, Vrije Universiteit, and Programa de Investigación en Cambio Climático, Universidad Nacional Autónoma de México), Veronica Lupi (Institute for Environmental Studies – IVM, Vrije Universiteit, and Fondazione Eni Enrico Mattei), W. J. Wouter Botzen (Institute for Environmental Studies – IVM), Richard S. J. Tol (Institute for Environmental Studies – IVM, Vrije Universiteit, Department of Economics, University of Sussex, Department of Spatial Economics, Vrije Universiteit, Tinbergen Institute, CESifo, Payne Institute of Public Policy, Colorado School of Mines, and College of Business, Abu Dhabi University)
"Nature Communications", 16, 4193 (2025).
The social cost of carbon (SCC) serves as a concise measure of climate change’s economic impact, often reported at the global and country level. SCC values tend to be disproportionately high for less-developed, populous countries. Previous studies do not distinguish between urban and non-urban areas and ignore the synergies between local and global warming. High exposure and concurrent socioenvironmental problems exacerbate climate change risks in cities. Using a spatially explicit integrated assessment model, the SCC is estimated at USD$187/tCO2, rising to USD$490/tCO2 when including urban heat island (UHI) warming. Urban SCC dominates, representing about 78%-93% of the global SCC, due to both urban exposure and the UHI. This finding implies that the highest global greenhouse gases (GHGs) emitters also experience the largest economic losses. Global cities have substantial leverage on climate policy at the national and global scales and strong incentives for a swift transition to a low-carbon economy.