Calibration against official U.S. valuation methods: VSL and the social cost of carbon

The paper answers whether β_W rankings are artifacts of VSL and SCC choices

The paper targets a narrow regulatory-practice objection: environmental β_W values could look policy-relevant only because the welfare ledger uses nonstandard mortality-risk and climate-damage prices.

• β_W is defined as annual system welfare destroyed divided by annual revenue: β_W = ΔW / Π
• The challenged channels are mortality risk from pollution and climate damages from greenhouse gas emissions
• The paper’s answer is procedural: use federal values, disclose departures, and test whether rankings change

The ledger’s 11.5 million VSL is built from EPA’s 10.0 million 2020 estimate

The VSL calculation follows the federal adjustment logic named in the paper: start with EPA’s central estimate, apply real income growth using elasticity 1.0, then apply the GDP deflator.

• EPA base value: $10.0 million in 2020 USD
• Real GDP per capita rose about 5% from 2020 to 2023, from 63,500 to 66,700 in chained 2012 dollars
• GDP deflator rose about 9% from 2020 to 2023, giving about 11.4 million before rounding to 11.5 million

The $11.5 million VSL sits between EPA’s lower bound and DOT’s 2023 value

The paper argues consistency by placement inside the federal range, not by claiming a single correct VSL.

• EPA range cited in the paper: 7.4 million to 12.5 million
• DOT 2023 recommended VSL: $12.5 million
• HHS value cited by the paper: about 11.6 million; USDA range: 7.5 million to $12.0 million

Context-specific VSL changes are allowed if domain papers source them

The paper does not deny that mortality risks can differ by context. It names cancer-risk valuation as a case where EPA sometimes applies a higher VSL because dread and latency matter.

• Ledger default does not currently include context-specific VSL adjustments
• A domain paper can use a context-appropriate VSL if it is traceable to federal practice
• Any different VSL must be explained and accompanied by β_W rankings under the federal default

The ledger’s $190 per ton SCC matches EPA’s 2023 interim central estimate in nominal terms

For CO₂, the paper uses the EPA/IWG 2023 interim central SCC at the 2% near-Ramsey rate and keeps the nominal $190 figure in 2023 USD.

• EPA/IWG value: $190 per metric ton of CO₂ in 2020 USD at a 2% near-Ramsey discount rate
• Inflation adjustment using the 9% GDP deflator would be about $207 per ton in 2023 USD
• The ledger keeps $190 per ton, which lowers carbon β_W relative to using the inflation-adjusted federal value

The paper uses IWG discount-rate cases instead of a single climate price

The SCC treatment is parameterized around the IWG cases, so users can see how β_W changes when climate damages are priced under different discount-rate assumptions.

• 1.5% discount rate: 310 per ton in 2020 USD, about 338 in 2023 USD
• 2.5% discount rate: 120 per ton in 2020 USD, about 131 in 2023 USD
• 3.0% 95th percentile case: 380 per ton in 2020 USD, about 414 in 2023 USD

The only deliberate departure is setting pure time preference to zero

The paper accepts the federal 2% near-Ramsey SCC as the central comparison, but the ledger’s welfare theory changes one Ramsey term for intergenerational welfare.

• Federal near-Ramsey case: ρ = 0.5%, η = 1.0, g = 1.5%, so r = 2.0%
• Ledger default: ρ = 0, η = 1.0, g = 1.5%, so r = 1.5%
• The paper says this raises SCC about 30–50% relative to the 2% rate, depending on the damage function

Future generations are treated as a system coordinate, not current bargainers’ preference

The Missing System Theorem supplies the paper’s reason for ρ = 0: future welfare lies outside the bilateral payoff space of current bargaining parties.

• Current bargainers do not represent future generations inside the transaction being evaluated
• A positive pure rate of time preference would let current preferences discount future welfare losses merely because they occur later
• The paper still requires reporting β_W at the federal 2% near-Ramsey default

Every environmental domain paper must show the federal values, chosen values, and β_W results

The paper turns calibration into a repeatable requirement for future ledger papers, so readers can trace every VSL and SCC choice back to federal practice.

• State VSL in 2023 USD and cite EPA, DOT, or another federal source
• State SCC per metric ton of CO₂ in 2023 USD, the discount rate, and the IWG source
• Include a table with federal defaults, chosen values, and resulting β_W for each activity

If federal-default values reorder β_W results, the paper says to disclose the parameter driver

The consistency claim is framed as testable: recompute environmental channels using federal-default VSL and SCC, then check whether policy-relevant rankings move.

• Federal-default VSL range for the test: 10.0 million to 12.5 million in 2023 USD
• Federal-default SCC for the test: $190 per ton at a 2% near-Ramsey rate in 2023 USD
• Material reordering means a change in the top three activities by β_W or a change from β_W > 1 to β_W < 1 for any activity

The paper claims federal-method consistency, not peer-reviewed validation

The paper’s conclusion is limited: the ledger’s default VSL and SCC are traceable to official U.S. methods, while the zero-pure-time-preference choice is disclosed and sensitivity-tested.

• 1: $11.5 million VSL is within the stated federal VSL range
• 2: 190 per ton SCC equals the EPA/IWG central estimate nominally and is below the inflation-adjusted 207 value
• All results are proposed and not yet peer-reviewed