Advertisement

Environmental Modeling & Assessment

, Volume 20, Issue 5, pp 453–473 | Cite as

The Comparative Impact of Integrated Assessment Models’ Structures on Optimal Mitigation Policies

  • Antonin Pottier
  • Etienne Espagne
  • Baptiste Perrissin FabertEmail author
  • Patrice Dumas
Article

Abstract

This paper aims at providing a consistent framework to appraise alternative modeling choices that have driven the so-called “when flexibility” controversy since the early 1990s, dealing with the optimal timing of mitigation efforts and the social cost of carbon (SCC). The literature has emphasized the critical impact of modeling structures on the optimal climate policy. We estimate within a unified framework the comparative impact of modeling structures and investigate the structural modeling drivers of differences in climate policy recommendations. We use the integrated assessment model (IAM) RESPONSE to capture a wide array of modeling choices. Specifically, we analyse four emblematic modeling choices, namely the forms of the damage function (quadratic vs. sigmoid) and the abatement cost (with or without inertia), the treatment of uncertainty, and the decision framework, deterministic or sequential, with different dates of information arrival. We define an original methodology based on an equivalence criterion to compare modeling structures, and we estimate their comparative impact on two outputs: the optimal SCC and abatement trajectories. We exhibit three key findings: (1) IAMs with a quadratic damage function are insensitive to changes of other features of the modeling structure, (2) IAMs involving a non-convex damage function entail contrasting climate strategies, (3) Precautionary behaviors can only come up in IAMs with non-convexities in damage.

Keywords

Integrated assessment models Climate damage function Sensitivity analysis Modeling comparison Sequential decision-making 

References

  1. 1.
    Ambrosi, P., Hourcade, J., Hallegatte, S., Lecocq, F., Dumas, P., Ha-Duong, M. (2003). Optimal control models and elicitation of attitudes towards climate damages. Environmental Modeling and Assessment, 8(3), 133–147.CrossRefGoogle Scholar
  2. 2.
    Archer, D., & Brovkin, V. (2008). The millennial atmospheric lifetime of anthropogenic CO2. Climatic Change, 90(3), 283–297.CrossRefGoogle Scholar
  3. 3.
    Archer, D., Eby, M., Brovkin, V., Ridgwell, A., Cao, L., Mikolajewicz, U., Caldeira, K., Matsumoto, K., Munhoven, G., Montenegro, A., other (2009). Atmospheric lifetime of fossil fuel carbon dioxide. Annual Review of Earth and Planetary Sciences, 37, 117–134.CrossRefGoogle Scholar
  4. 4.
    Arrow, K., & Fisher, A. (1974). Environmental preservation, uncertainty, and irreversibility. The Quarterly Journal of Economics, 88(2), 312–319.CrossRefGoogle Scholar
  5. 5.
    Baker, M.B., & Roe, G.H. (2009). The shape of things to come: why is climate change so predictable? Journal of Climate, 22(17), 4574–4589.CrossRefGoogle Scholar
  6. 6.
    Cass, D. (1965). Optimum growth in an aggregative model of capital accumulation. The Review of Economic Studies, 32(3), 233–240.CrossRefGoogle Scholar
  7. 7.
    Chichilnisky, G., & Heal, G. (1993). Global environmental risks. The Journal of Economic Perspectives, 7(4), 65–86.CrossRefGoogle Scholar
  8. 8.
    Crost, B., & Traeger, C.P. (2013). Optimal climate policy: uncertainty versus monte carlo. Economics Letters, 120(3), 552–558.CrossRefGoogle Scholar
  9. 9.
    Dasgupta, P. (2007). Commentary: the Stern review’s economics of climate change. National Institute Economic Review, 199(1), 4–7.Google Scholar
  10. 10.
    Dumas, P., Espagne, E., Perrissin-Fabert, B., Pottier, A. (2012). Comprehensive description of the integrated assessment model RESPONSE. Working Paper CIRED.Google Scholar
  11. 11.
    Espagne, E., Perrissin-Fabert, B., Pottier, A., Nadaud, F., Dumas, P. (2012). Disentangling the Stern / Nordhaus controversy: beyond the discounting clash. FEEM Nota Di Lavoro.Google Scholar
  12. 12.
    Friedlingstein, P., Cox, P., Betts, R., Bopp, L., Von Bloh, W., Brovkin, V., Cadule, P., Doney, S., Eby, M., Fung, I. (2006). Climate-carbon cycle feedback analysis: results from the c4mip model intercomparison. Journal of Climate, 19(14), 3337–3353.CrossRefGoogle Scholar
  13. 13.
    Gitz, V., & Ciais, P. (2003). Amplifying effects of land-use change on future atmospheric CO2 levels. Global Biogeochemical Cycles, 17(1), 1024–1029.CrossRefGoogle Scholar
  14. 14.
    Golosov, M., Hassler, J., Krusell, P., Tsyvinski, A. (2014). Optimal taxes on fossil fuel in general equilibrium. Econometrica, 82(1), 41–88.CrossRefGoogle Scholar
  15. 15.
    Goulder, L., & Mathai, K. (2000). Optimal CO2 abatement in the presence of induced technological change. Journal of Environmental Economics and Management, 39(1), 1–38.CrossRefGoogle Scholar
  16. 16.
    Ha-Duong, M. (1998). Comment tenir compte de l’irr’eversibilit’e dans l”evaluation int’gr’ee du changement climatique? PhD thesis, EHESS.Google Scholar
  17. 17.
    Ha-Duong, M. (1998). Quasi-option value and climate policy choices. Energy Economics, 20(5–6), 599–620.CrossRefGoogle Scholar
  18. 18.
    Ha-Duong, M., Grubb, M., Hourcade, J. (1997). Influence of socioeconomic inertia and uncertainty on optimal CO2-emission abatement. Nature, 390(6657), 270–273.CrossRefGoogle Scholar
  19. 19.
    Henry, C. (1974). Investment decisions under uncertainty: the Irreversibility Effect. The American Economic Review, 64(6), 1006–1012.Google Scholar
  20. 20.
    Hof, A., den Elzen, M., van Vuuren, D. (2008). Analysing the costs and benefits of climate policy: value judgements and scientific uncertainties. Global Environmental Change, 18(3), 412–424.CrossRefGoogle Scholar
  21. 21.
    Hope, C. (2006). The marginal impact of CO2 from PAGE2002: an integrated assessment model incorporating the IPCC’s five reasons for concern. Integrated Assessment, 6(1), 19–56.Google Scholar
  22. 22.
    IPCC. (2007). Climate change 2007: Mitigation. Contribution of working group III to the fourth assessment report of the intergovernmental panel on climate change. Cambridge: Cambridge University Press.Google Scholar
  23. 23.
    Keller, K., Bolker, B., Bradford, D. (2004). Uncertain climate thresholds and optimal economic growth. Journal of Environmental Economics and Management, 48(1), 723–741.CrossRefGoogle Scholar
  24. 24.
    Kelly, D., & Kolstad, C. (1999). Bayesian learning, growth, and pollution. Journal of Economic Dynamics and Control, 23(4), 491–518.CrossRefGoogle Scholar
  25. 25.
    Kolstad, C. (1996). Fundamental irreversibilities in stock externalities. Journal of Public Economics, 60(2), 221–233.CrossRefGoogle Scholar
  26. 26.
    Koopmans, T. (1963). Appendix to On the concept of optimal economic growth. Cowles Foundation Discussion Papers.Google Scholar
  27. 27.
    Kopp, R. E., Golub, A., Keohane, N. O., Onda, C. (2012). The influence of the specification of climate change damages on the social cost of carbon. Economics: The Open-Access, Open-Assessment E-Journal, 6(2012–13), 1–40.Google Scholar
  28. 28.
    Manne, A., Mendelsohn, R., Richels, R. (1995). Merge: A model for evaluating regional and global effects of GHG reduction policies. Energy Policy, 23(1), 17–34.CrossRefGoogle Scholar
  29. 29.
    Manne, A., & Richels, R. (1992). Buying greenhouse insurance: the economic costs of carbon dioxide emission limits. The MIT Press.Google Scholar
  30. 30.
    Moyer, E., Woolley, M.D., Glotter, M., Weisbach, D.A. (2013). Climate impacts on economic growth as drivers of uncertainty in the social cost of carbon. Center for Robust Decision Making on Climate and Energy Policy Working Paper, 13, 25.Google Scholar
  31. 31.
    Nordhaus, W. (1994). Managing the global commons: the economics of climate change. Cambridge: MIT Press.Google Scholar
  32. 32.
    Nordhaus, W. (2007). A review of the Stern Review on the Economics of Climate Change. Journal of Economic Literature, 45(3), 686–702.CrossRefGoogle Scholar
  33. 33.
    Nordhaus, W. (2008). A question of balance. New Haven: Yale University Press.Google Scholar
  34. 34.
    Nordhaus, W., & Boyer, J. (2003). Warming the world: economic models of global warming: MIT Press.Google Scholar
  35. 35.
    Pindyck, R. (2000). Irreversibilities and the timing of environmental policy. Resource and energy economics, 22(3), 233–259.CrossRefGoogle Scholar
  36. 36.
    Ramsey, F. (1928). A mathematical theory of saving. The Economic Journal, 38(152), 543–559.CrossRefGoogle Scholar
  37. 37.
    Roe, G.H., & Bauman, Y. (2013). Climate sensitivity: should the climate tail wag the policy dog? Climatic change, 117(4), 647–662.CrossRefGoogle Scholar
  38. 38.
    Schneider, S., & Thompson, S. (1981). Atmospheric CO2 and climate: importance of the transient response. Journal of Geophysical Research, 86(C4), 3135–3147.CrossRefGoogle Scholar
  39. 39.
    Stern, N. (2006). The economics of climate change. Cambridge University Press.Google Scholar
  40. 40.
    Sterner, T., & Persson, U.M. (2008). An even sterner review: introducing relative prices into the discounting debate. Review of Environmental Economics and Policy, 2(1), 61–76.CrossRefGoogle Scholar
  41. 41.
    Tol, R.S.J. (1997). On the optimal control of carbon dioxide emissions: an application of FUND. Environmental Modeling & Assessment, 2(3), 151–163.CrossRefGoogle Scholar
  42. 42.
    Tol, R.S.J. (2009). Climate feedbacks on the terrestrial biosphere and the economics of climate policy: an application of fund. Technical Report WP288, Economic and Social Research Institute (ESRI).Google Scholar
  43. 43.
    Ulph, A., & Ulph, D. (1997). Global warming, irreversibility and learning. The Economic Journal, 107(442), 636–650.CrossRefGoogle Scholar
  44. 44.
    Vogt-Schilb, A., Meunier, G., Hallegatte, S. (2012). How inertia and limited potentials affect the timing of sectoral abatements in optimal climate policy. World Bank Policy Research, 6154.Google Scholar
  45. 45.
    Weitzman, M. (2007). A review of the Stern Review on the economics of climate change. Journal of Economic Literature, 45 (3), 703–724.CrossRefGoogle Scholar
  46. 46.
    Weitzman, M.L. (2012). GHG targets as insurance against catastrophic climate damages. Journal of Public Economic Theory, 14(2), 221–244.CrossRefGoogle Scholar
  47. 47.
    Wigley, T., Richels, R., Edmonds, J. (1996). Economic and environmental choices in the stabilization of atmospheric CO2 concentrations. Nature, 379(6562), 240–243.CrossRefGoogle Scholar
  48. 48.
    Yohe, G., & Tol, R. (2007). The Stern Review: Implications for climate change. Environment: Science and Policy for Sustainable Development, 49(2), 36–43.CrossRefGoogle Scholar

Copyright information

© Springer International Publishing Switzerland 2015

Authors and Affiliations

  • Antonin Pottier
    • 1
  • Etienne Espagne
    • 1
  • Baptiste Perrissin Fabert
    • 1
    Email author
  • Patrice Dumas
    • 2
  1. 1.Centre International de Recherche sur l’Environnement et le Développement (CIRED)Nogent-sur-MarneFrance
  2. 2.Centre de Coopération International en Recherche Agronomique pour le Developpement (CIRAD)Nogent-sur-MarneFrance

Personalised recommendations