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Integrated Economic and Climate Modeling

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Abstract

This survey examines the history and current practice in integrated assessment models (IAMs) of the economics of climate change. It begins with a review of the emerging problem of climate change. The next section provides a brief sketch of the rise of IAMs in the 1970s and beyond. The subsequent section is an extended exposition of one IAM, the DICE/RICE family of models. The purpose of this description is to provide readers an example of how such a model is developed and what the major components are. The final section discusses major important open questions that continue to occupy IAM modelers. These involve issues such as the discount rate, uncertainty, the social cost of carbon, the potential for catastrophic climate change, algorithms, and fat-tailed distributions. These issues are ones that pose both deep intellectual challenges as well as important policy implications for climate change and climate-change policy.

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  • William D. Nordhaus, 2011. "Integrated Economic and Climate Modeling," Cowles Foundation Discussion Papers 1839, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:1839
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    More about this item

    Keywords

    Climate change; Integrated assessment models; Environmental economics; Social cost of carbon; Large-scale mathematical models;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • H4 - Public Economics - - Publicly Provided Goods

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