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Decomposing the integrated assessment of climate change

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  • Bohringer, Christoph
  • Loschel, Andreas
  • Rutherford, Thomas F.

Abstract

We present a decomposition approach for integrated assessment modeling of climate policy based on a linear approximation of the climate system. Our objective is to demonstrate the usefulness of decomposition for integrated assessment models posed in a complementarity format. First, the complementarity formulation cum decomposition permits a precise representation of post-terminal damages thereby substantially reducing the model horizon required to produce an accurate approximation of the infinite-horizon equilibrium. Second, and central to the economic assessment of climate policies, the complementarity approach provides a means of incorporating second-best effects that are not easily represented in an optimization model.
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  • Bohringer, Christoph & Loschel, Andreas & Rutherford, Thomas F., 2007. "Decomposing the integrated assessment of climate change," Journal of Economic Dynamics and Control, Elsevier, vol. 31(2), pages 683-702, February.
    • Handle: RePEc:eee:dyncon:v:31:y:2007:i:2:p:683-702
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    Cited by:

    1. Olga Kiuila & Thomas F. Rutherford, 2014. "Economic modeling approaches: optimization versus equilibrium," Working Papers 2014-04, Faculty of Economic Sciences, University of Warsaw.
    2. Michael Finus & Bianca Rundshagen & Johan Eyckmans, 2014. "Simulating a sequential coalition formation process for the climate change problem: first come, but second served?," Annals of Operations Research, Springer, vol. 220(1), pages 5-23, September.
    3. Loisel, Rodica, 2009. "Environmental climate instruments in Romania: A comparative approach using dynamic CGE modelling," Energy Policy, Elsevier, vol. 37(6), pages 2190-2204, June.
    4. Simon Dietz & Bruno Lanz, 2019. "Growth and Adaptation to Climate Change in the Long Run," CESifo Working Paper Series 7986, CESifo.
    5. Theodoridou, Ifigeneia & Papadopoulos, Agis M. & Hegger, Manfred, 2012. "A feasibility evaluation tool for sustainable cities – A case study for Greece," Energy Policy, Elsevier, vol. 44(C), pages 207-216.
    6. Honkatukia, Juha & Forsström, Juha, 2009. "The Costs of the EU Energy Package for Finland - a Model-Based Assessment," Conference papers 331824, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Rodica Loisel, 2009. "Environmental climate instruments in Romania: A comparative approach using dynamic CGE modelling," Post-Print halshs-00441491, HAL.
    8. Schenker, Oliver & Bucher, Raphael, 2010. "On interactions of optimal climate policy and international trade. An assessment of border carbon measures," MPRA Paper 25820, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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