Research Team: E. Somanathan, Raavi Aggarwal & Monisankar Bishnu

Funded by: NITI Aayog

Description: ISI Delhi is working with NITI Aayog to support public spending decisions on social projects by estimating climate change damages using the social cost of carbon. The goal is to turn academic research into practical policy action.

This study provides updated estimates of five key parameters for economic appraisal of public-sector projects in India:

(i) The Social Discount Rate (SDR), which measures society’s preference for present versus future consumption

(ii) The Standard Conversion Factor (SCF), which adjusts traded goods prices from market to economic values

(iii) The Shadow Exchange Rate Factor (SERF), which reflects the true economic cost of foreign exchange

(iv) The Shadow Wage Rate Factor (SWRF), which corrects discrepancies between statutory and market wages for unskilled labor

(v) The Social Cost of Carbon (SCC), which measures economic damages from rising carbon dioxide emissions.