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SCCs and the use of IAMs: Let's separate the wheat from the chaff

Author

Listed:
  • Franck Nadaud

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Etienne Espagne

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Antonin Pottier

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Baptiste Perrissin Fabert
  • Patrice Dumas

    (Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)

Abstract

This paperargues that integrated assessment models (IAMs) are useful tools to build corridors ofsocialcosts of carbon (SCC)reflecting divergent worldviews.Instead of pursuing the elusive quest for the right SCC, IAMs could indeed be useful tools to rationalize the different beliefs on climate related parameters (or worldviews) in the climate debate and help build politically coherent corridors of SCCs. We first take the example of the Stern-Nordhaus controversy as an illustration of the impossible quest for the right SCC. Disentangling the drivers of this controversy, we show that the main differences in results come from a mix of ethical choices of therepresentativeagent(puretimepreference),long-termassumptionsontechnicalparameters (abatement cost dynamics) and climate related unknowns (climate sensitivity). We then argue that these sources of disagreement can be best understood as differing worldviews rather than purescientificuncertainties. ThisimpliesthatIAMsareoflimitedhelpindetermining theright SCC,in linewithPindyck(2017).Butcontrary tohim, weconsideritnecessarytoseparatethe wheat from the chaff, and argue for a middle way between the blind confidence in IAMs' outputs and their full rejection with respect to the SCC debate. Instead, we show how they could help rationalize the climate debates around a corridor of SCCs. We thus analyze the drivers of such corridors of values, or how the sources of divergent worldviews differently impact the SCC-abatementspacewithtime.All inall,theclimatepolicydebatearoundcarbonpricingcan benefitfromarenewedunderstandingoftheroleofIAMs,lessdivinatoryandmoreinstitutionallycentered.

Suggested Citation

  • Franck Nadaud & Etienne Espagne & Antonin Pottier & Baptiste Perrissin Fabert & Patrice Dumas, 2018. "SCCs and the use of IAMs: Let's separate the wheat from the chaff," Post-Print hal-01780920, HAL.
    • Handle: RePEc:hal:journl:hal-01780920
    DOI: 10.1016/j.inteco.2018.02.004
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    Cited by:

    1. Dafermos, Yannis & Nikolaidi, Maria, 2019. "Fiscal policy and ecological sustainability: a post-Keynesian perspective," Greenwich Papers in Political Economy 37777, University of Greenwich, Greenwich Political Economy Research Centre.
    2. Yannis Dafermos & Maria Nikolaidi, 2019. "Fiscal policy and ecological sustainability," FMM Working Paper 52-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Mengistie Kindu & Logan Robert Bingham & José G. Borges & Susete Marques & Olha Nahorna & Jeannette Eggers & Thomas Knoke, 2022. "Opportunity Costs of In Situ Carbon Storage Derived by Multiple-Objective Stand-Level Optimization—Results from Case Studies in Portugal and Germany," Land, MDPI, vol. 11(11), pages 1-12, November.
    4. Etienne Espagne, 2018. "Money, Finance and Climate: The Elusive Quest for a Truly Integrated Assessment Model," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 131-143, March.

    More about this item

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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