Modeling the Impact of Warming in Climate Change Economics
Name
2010-001.pdf
Size
275.07 KB
Format
Adobe PDF
Checksum (MD5)
3843b8a05aa975fdb1218d0f2377eb78
Author(s)
Pindyck, Robert S.
Date Issued
January 2010
Publisher
MIT Center for Energy and Environmental Policy Research
Series/Report no.
MIT-CEEPR (Series);2010-001
Abstract
Any economic analysis of climate change policy requires some model that describes the impact of warming on future GDP and consumption. Most integrated assessment models (IAMs) relate temperature to the level of real GDP and consumption, but there are theoretical and empirical reasons to expect temperature to affect the growth rate rather than level of GDP. Does this distinction matter in terms of implications for policy? And how does the answer depend on the nature and extent of uncertainty over future temperature change and its impact? I address these questions by estimating the fraction of consumption society would be willing to sacrifice to limit future increases in temperature, using probability distributions for temperature and impact inferred from studies assembled by the IPCC, and comparing estimates based on a direct versus growth rate impact of temperature on GDP.
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