["Review of Income and Wealth, Volume 72, Issue 2, May 2026. ", "\nABSTRACT\nWe analyze the implications of incorporating the imputed external cost of carbon into welfare accounting. Specifically, we construct an emissions‐adjusted welfare measure for OECD countries from 1960 to 2019 by deducting from per capita consumption the imputed external cost of observed CO2 emissions, valued at the social cost of carbon (SCC). Within the Jones‐Klenow framework, this provides a partial environmental correction to welfare comparisons that preserves tractability and cross‐country comparability. Our findings indicate that this emissions‐adjusted welfare index is, on average, about 2% lower than the conventional measure in OECD countries, with smaller corrections in economies with lower incomes. Because the adjustment operates only through the consumption term, these estimates should be interpreted as a conservative consumption‐side correction rather than as the full welfare effect of carbon pricing. We also find that in most OECD countries, consumption‐based CO2 emissions exceed production‐based emissions, resulting in a 0.6 percentage point larger welfare correction when the former are considered. A similar‐magnitude effect emerges when using GHG instead of CO2. Furthermore, our analysis reveals a nonlinear relationship between the discount rate and welfare, emphasizing that SCC estimates and their welfare implications vary substantially across discounting and damage‐function assumptions. Comparing our SCC benchmark with estimates from the literature, we show that while SCC values fluctuate across methodologies, the resulting welfare adjustment remains moderate but systematic.\n"]