Search

This paper offers some thoughts on the value added of new economic estimates of climate change damages. We begin with a warning to beware of analyses that are so narrow that they miss a good deal of the important economic ramifications of the full suite of manifestations of climate change. Our second set of comments focuses attention on one of the most visible products of integrated assessment modeling-estimates of the social cost of carbon which we take as one example of aggregate economic indicators that have been designed to summarize climate risk in policy deliberations. Our point is that these estimates are so sensitive to a wide range of parameters that improved understanding of economic damages across many (if not all) climate sensitive sectors may offer only limited value added. Having cast some doubt on the ability of improved estimates of economic damages to increase the value of economic damage estimates in integrated assessment modeling designed to inform climate policy deliberations, we offer an alternative approach-describing implicitly a research agenda that could (a) effectively inform mitigation decisions while, at the same time, (b) providing economic estimates for aggregate indicators like the social cost of carbon. [ABSTRACT FROM AUTHOR]

Key limitations of integrated assessment models (IAMs) are their highly stylized and aggregated representation of climate damages and associated economic responses, as well as the omission of specific investments related to climate change adaptation. This paper proposes a framework for modeling climate impacts and adaptation that clarifies the relevant research issues and provides a template for making improvements. We identify five desirable characteristics of an ideal integrated assessment modeling platform, which we elaborate into a conceptual model that distinguishes three different classes of adaptation-related activities. Based on these elements we specify an impacts- and adaptation-centric IAM, whose optimality conditions are used to highlight the types of functional relationships necessary for realistic representations of adaptation-related decisions, the specific mechanisms by which these responses can be incorporated into IAMs, and the ways in which the inclusion of adaptation is likely to affect the simulations' results. [ABSTRACT FROM AUTHOR]

Social, economic, and environmental systems can be vulnerable to disruptions in water supplies that are likely to accompany future climate changes. Coupled with the challenges of tightening environmental regulations, population growth, economic development and fiscal constraints water supply systems are being pushed beyond the limits of their design and capacity for maintenance. In this paper we briefly review key economic concepts, various economic measures and metrics, and methods to estimate the economic effects on water resources from water supply changes that could accompany climate change. We survey some of the recent empirical literature that focuses on estimates developed for U.S. watersheds at both national and regional scales. Reported estimates of potential damage and loss associated with climate and water supply changes that we observe are significant, though often the metrics vary and make valid and consistent direct cross-comparisons difficult. Whether in terms of changes in GDP or in terms of estimated changes in economic welfare based on associated changes in economic costs and benefits, both national and regional estimates suggest that governments and organizations incorporate prudent steps to assess vulnerabilities to plausible future water supply and demand scenarios and develop responsive adaptation strategies. [ABSTRACT FROM AUTHOR]

We report the results of an uncertainty decomposition analysis of the social cost of carbon as estimated by FUND, a model that has a more detailed representation of the economic impact of climate change than any other model. Some of the parameters particularly influence impacts in the short run whereas other parameters are important in the long run. Some parameters are influential in some regions only. Some parameters are known reasonably well, but others are not. Ethical values, such as the pure rate of time preference and the rate of risk aversion, therefore affect not only the social cost of carbon, but also the importance of the parameters that determine its value. Some parameters, however, are consistently important: cooling energy demand, migration, climate sensitivity, and agriculture. The last two are subject to a large research effort, but the first two are not. [ABSTRACT FROM AUTHOR]