Transient Temperature Response Modeling in IAMs: The Effects of Over Simplification on the SCC

Abstract

Integrated Assessment Models (IAMs) couple representations of the natural climate system with models of the global economy to evaluate climate and energy policies. Such models are currently used to derive the benefits of carbon mitigation policies through estimates of the social cost of carbon (SCC). To remain tractable these models often utilize highly simplified representations of complex natural, social, and economic systems. The authors consider three prominent IAMs, DICE, FUND, and PAGE, and compare their highly simplified temperature response models to two upwelling diffusion energy balance models that better reflect the progressive heat uptake of the deep ocean. They find that all three IAMs fail to fully capture important characteristics in the dynamics of temperature response, especially for high equilibrium climate sensitivities. This has serious implications given these models are often run with distributions for the equilibrium climate sensitivity which have a positive probability for such states of the world. The authors find that, all else equal, the temperature response model in FUND can lead to estimates of the expected SCC that are 10-75% lower than those derived using more realistic climate models, while the models in DICE and PAGE lead to expected SCC estimates that are 10-110% and 40-260% higher, respectively. Special IssueThe Social Cost of Carbon JEL Q54, Q58

Empirically Constrained Climate Sensitivity and the Social Cost of Carbon

“…Among the economic parameters, the most influential are the discount rate and the coefficients of the damages function (Marten 2011). A key climate parameter is equilibrium climate sensitivity (ECS), which represents the long term temperature change from doubling atmospheric CO2.…”

Climate module disparities explain inconsistent estimates of the social cost of carbon in integrated assessment models

“…We found that the main SCC variations were attributed to their differences in the climate modules of these IAMs rather than their damage modules. Although previous studies have pointed out the physical differences in the built-in climate modules of the three IAMs, 12,22,29,30,44 our study extends existing knowledge by quantifying the impact of climate module differences on the wide, uncertain range of SCC estimates from model choices.…”

“…Because those climate components differ in terms of climate module representation and physical parameters, their temperature responses also vary significantly. [29][30][31] To illustrate this, we ran the three climate modules of the IAMs under various SSP emissions pathways and focused on their differences in simulating global mean surface temperature (GMST) anomalies and responding to a pulse emission experiment.…”

Incremental CH4and N2O mitigation benefits consistent with the US Government's SC-CO2estimates

“…They estimated the annual social costs for the years 2010 -2050 along a single socio-economic-emissions pathway given uncertainty about the equilibrium climate sensitivity parameter. An advantage of their approach is that through the use of a more detailed, yet still relatively simple, climate model their results are not affected by over-simplification of temperature response or atmospheric chemistry, which have been shown to have non-negligible effects on the estimates of social costs (Marten, 2011;Warren et al, 2010).…”