The Positive Externalities of Carbon Dioxide: Estimating the Monetary Benefits of Rising Atmospheric CO2 Concentrations on Global Food Production
Advancements in technology and scientific expertise that accompanied the Industrial Revolution initiated a great transformation within the global enterprise of agriculture. More efficient machinery and improved plant cultivars, for example, paved the way toward higher crop yields and increased global food production. And with the ever-burgeoning population of the planet, the increase in food production was a welcomed societal benefit. But what remained largely unknown to society at that time, was the birth of an ancillary aid to agriculture that would confer great benefits upon future inhabitants of the globe in the decades and centuries to come. The source of that aid: atmospheric carbon dioxide (CO2).
Several analyses have been conducted to estimate potential monetary damages of the rising atmospheric CO2 concentration. Few, however, have attempted to investigate its monetary benefits. Chief among such positive externalities is the economic value added to global crop production by several growth-enhancing properties of atmospheric CO2 enrichment. As literally thousands of laboratory and field studies have demonstrated, elevated levels of atmospheric CO2 have been conclusively shown to stimulate plant productivity and growth, as well as to foster certain water-conserving and stress-alleviating benefits. For a 300-ppm increase in the air's CO2 content, for example, herbaceous plant biomass is typically enhanced by 25 to 55%, representing an important positive externality that is absent from today's state-of-the-art social cost of carbon (SCC) calculations.
The present study addresses this deficiency by providing a quantitative estimate of the direct monetary benefits conferred by atmospheric CO2 enrichment on both historic and future global crop production. The results indicate that the annual total monetary value of this benefit grew from $18.5 billion in 1961 to over $140 billion by 2011, amounting to a total sum of $3.2 trillion over the 50-year period 1961-2011. Projecting the monetary value of this positive externality forward in time reveals it will likely bestow an additional $9.8 trillion on crop production between now and 2050.
The incorporation of these findings into future SCC studies will help to ensure a more realistic assessment of the total net economic impact of rising atmospheric CO2 concentrations due to both negative and positive externalities. Furthermore, the observationally-deduced benefits of atmospheric CO2 enrichment on crop production should be given premier weighting over the speculative negative externalities that are projected to occur as a result of computer model computations of CO2-induced global warming. Until this is done, little if any weight should be placed on current SCC calculations.