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Transient temperature response modeling in IAMs: The effects of over simplification on the SCC

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  • Marten, Alex L.

Abstract

Integrated Assessment Models (IAMs) couple representations of the natural climate system with models of the global economy to evaluate climate and energy policies. Such models are currently used to derive the benefits of carbon mitigation policies through estimates of the social cost of carbon (SCC). To remain tractable these models often utilize highly simplified representations of complex natural, social, and economic systems. The authors consider three prominent IAMs, DICE, FUND, and PAGE, and compare their highly simplified temperature response models to two upwelling diffusion energy balance models that better reflect the progressive heat uptake of the deep ocean. They find that all three IAMs fail to fully capture important characteristics in the dynamics of temperature response, especially for high equilibrium climate sensitivities. This has serious implications given these models are often run with distributions for the equilibrium climate sensitivity which have a positive probability for such states of the world. The authors find that, all else equal, the temperature response model in FUND can lead to estimates of the expected SCC that are 1075% lower than those derived using more realistic climate models, while the models in DICE and PAGE lead to expected SCC estimates that are 10110% and 40260% higher, respectively. --

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Bibliographic Info

Article provided by Kiel Institute for the World Economy in its journal Economics: The Open-Access, Open-Assessment E-Journal.

Volume (Year): 5 (2011)
Issue (Month): 18 ()
Pages: 1-42

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Handle: RePEc:zbw:ifweej:201118

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Keywords: social cost of carbon; integrated assessment; transient temperature response;

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References

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  1. Pizer, William & Newell, Richard, 2000. "Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?," Discussion Papers dp-00-45, Resources For the Future.
  2. Weitzman, Martin L., 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," Scholarly Articles 3693423, Harvard University Department of Economics.
  3. Alex L. Marten & Stephen C. Newbold, 2011. "Estimating the Social Cost of Non-CO2 GHG Emissions: Methane and Nitrous Oxide," NCEE Working Paper Series 201101, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Feb 2011.
  4. Nordhaus, William D., 2007. "Two Centuries of Productivity Growth in Computing," The Journal of Economic History, Cambridge University Press, vol. 67(01), pages 128-159, March.
  5. Narita, Daiju & Tol, Richard S. J. & Anthoff, David, 2009. "Economic Costs of Extratropical Storms Under Climate Change: An Application of FUND," Papers WP274, Economic and Social Research Institute (ESRI).
  6. Plambeck, Erica L & Hope, Chris, 1996. "PAGE95 : An updated valuation of the impacts of global warming," Energy Policy, Elsevier, vol. 24(9), pages 783-793, September.
  7. Stephen Newbold & Adam Daigneault, 2009. "Climate Response Uncertainty and the Benefits of Greenhouse Gas Emissions Reductions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 44(3), pages 351-377, November.
  8. Detlef Vuuren & Jason Lowe & Elke Stehfest & Laila Gohar & Andries Hof & Chris Hope & Rachel Warren & Malte Meinshausen & Gian-Kasper Plattner, 2011. "How well do integrated assessment models simulate climate change?," Climatic Change, Springer, vol. 104(2), pages 255-285, January.
  9. Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November.
  10. Partha Dasgupta, 2008. "Discounting climate change," Journal of Risk and Uncertainty, Springer, vol. 37(2), pages 141-169, December.
  11. Martin L. Weitzman, 2010. "GHG Targets as Insurance Against Catastrophic Climate Damages," NBER Working Papers 16136, National Bureau of Economic Research, Inc.
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Cited by:
  1. Kögel, Tomas, 2011. "The social cost of carbon on an optimal balanced growth path," Economics Discussion Papers 2011-35, Kiel Institute for the World Economy.
  2. Richard S.J. Tol, 2012. "Targets for Global Climate Policy: An Overview," Working Paper Series 3712, Department of Economics, University of Sussex.
  3. Hwang, In Chang & Reynès, Frédéric & Tol, Richard S. J., 2011. "Climate Policy Under Fat-Tailed Risk: An Application of Dice," Papers WP403, Economic and Social Research Institute (ESRI).
  4. Richard S. J. Tol & In Chang Hwang & Frédéric Reynès, 2012. "The Effect of Learning on Climate Policy under Fat-tailed Uncertainty," Working Paper Series 5312, Department of Economics, University of Sussex.
  5. Kopp, Robert E. & Mignone, Bryan K., 2012. "The US government's social cost of carbon estimates after their first two years: Pathways for improvement," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(15), pages 1-41.

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