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The DICER Model: Methodological Issues and Initial Results

Author

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  • Ramon Arigoni Ortiz
  • Alexander Golub
  • Oleg Lugovoy
  • Anil Markandya
  • James Wang

Abstract

This paper introduces DICER, a model for the integrated assessment of climate – economy interactions within an optimal growth framework developed based on the structure of the DICE2007 model. We present the methodological differences introduced so far in DICER and some preliminary results of its deterministic version. We observe interesting results in comparison to other IAMs, such as (i) lower peak temperatures; (ii) radiative forcing differences; (iii) differences in control rates; and (iv) sensitivity of results to parameters such as climate sensitivity. A further innovation of this work has been to account for uncertainty and risk through an application of option pricing. The method allows for a simple representation of the risks through measures of volatility in the damages and abatement costs and shows that taking these factors into account lowers maximum mean temperatures by about 0.5oC. We also present some methodological issues that need to be dealt with in the near future in DICER.

Suggested Citation

  • Ramon Arigoni Ortiz & Alexander Golub & Oleg Lugovoy & Anil Markandya & James Wang, 2010. "The DICER Model: Methodological Issues and Initial Results," Working Papers 2010-11, BC3.
    • Handle: RePEc:bcc:wpaper:2010-11
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    References listed on IDEAS

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    1. Plambeck, Erica L. & Hope, Chris & Anderson, John, 1997. "The model: Integrating the science and economics of global warming," Energy Economics, Elsevier, vol. 19(1), pages 77-101, March.
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    1. Alexander Golub & Oleg Lugovoy & Anil Markandya & Ramon Arigoni Ortiz & James Wang, 2013. "Regional IAM: analysis of risk-adjusted costs and benefits of climate policies," Working Papers 2013-06, BC3.

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    Keywords

    Climate change; Integrated Impact Assessment Model (IAM); damage function;
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