10. Social Discount Rate and the Cost of Climate Change Risk in Turkey

The cost of climate change risk should be analyzed not only from an economic perspective but also based on policies formulated, using climate science forecasts, the allocation of rights, and crucial or behavioral assumptions. The discount rate (pure rate of time preference, growth in per capita consumption, and relative risk-aversion), an indicator of the severity of climate change and desirable climate policy-level, is vital in estimating the social cost of carbon. Moreover, changes in temperature, precipitation, increase in sea level, and the sensitivity to emissions affect the vulnerability of the sectors within climate models. This study identifies social discount rate and cost of carbon within key factors of climate change adaptation and focuses on the range of uncertainty since the uncertainty is often skewed, and the damage function is often nonlinear.