Climate Economics

Background (Wikipedia)

Major reports considering economics of climate change

• The IPCC 2007 Reports

• The Stern Review

MODELING

• EPA Modeling
  

• The ADAGE Model

More Resources

Carbon Productivity

Contrarian / Industry Reports

IPCC Reports

The Intergovernmental Panel on Climate Change (IPCC) has produced several reports where the economics literature on climate change is assessed. In the fourth IPCC assessments, the assessment of the economics literature is divided across two reports produced by IPCC Working Groups II and III.

HERE is the press release from UNEP:

IPCC confirms that cost-effective policies and technologies could greatly reduce global warming

Bangkok, 4 May 2007- A new assessment by the Intergovernmental Panel on Climate Change (IPCC) concludes that the world community could slow and then reduce global emissions of greenhouse gases (GHGs) over the next several decades by exploiting cost-effective policies and current and emerging technologies.

Based on the most up-to-date, peer-reviewed literature on emissions modelling, economics, policies and technologies, today's report reveals how governments, industry and the general public could together reduce the energy and carbon intensity of the global economy despite growing incomes and population levels.

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The Stern Review

The Stern Review on the Economics of Climate Change is a 700-page report released for the British government on October 30, 2006 by economist Nicholas Stern chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. The report discusses the effect of global warming on the world economy.

HERE is a report in the UK Guardian of subsequent analysis by Stern in 2008. The report says:

The author of an influential British government report arguing the world needed to spend just 1% of its wealth tackling climate change has warned that the cost of averting disaster has now doubled.

Lord Stern of Brentford made headlines in 2006 with a report that said countries needed to spend 1% of their GDP to stop greenhouse gases rising to dangerous levels. Failure to do this would lead to damage costing much more, the report warned - at least 5% and perhaps more than 20% of global GDP.

But speaking yesterday in London, Stern said evidence that climate change was happening faster than had been previously thought meant that emissions needed to be reduced even more sharply.

This meant the concentration of greenhouse gases in the atmosphere would have to be kept below 500 parts per million, said Stern. In 2006, he set a figure of 450-550ppm. "I now think the appropriate thing would be in the middle of that range," he said. "To get below 500ppm ... would cost around 2% of GDP."

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From the US Environmental Protection Agency EPA:

Understanding the economic effects of greenhouse gas (GHG) emission reductions is essential to assessing climate change scenarios. EPA assesses the economic implications of policies to reduce the greenhouse gas intensity of the U.S. economy. These economy–wide analyses are complemented by studies in key areas of economic interaction in climate scenarios, including the mitigation of non–CO₂ greenhouse gases, and carbon sequestration and land use change in the forestry and agriculture sector. Given the long time horizon of global greenhouse gas concentrations, EPA also analyzes long term climate scenarios.

EPA's Climate Economic Modeling

EPA uses a variety of economic models and analytical tools when conducting climate economic analyses.  Below is a list of the specific models used by EPA, categorized by model type: economy-wide models, mitigation models, integrated assessment models, and detailed sector models.  Each model has certain strengths that, when used alongside other models and analytical tools, can produce thorough analyses of climate change mitigation programs.

• Economy-Wide Models
  • Applied Dynamic Analysis of the Global Economy (ADAGE)
  • Intertemporal General Equilibrium Model (IGEM)
• Mitigation Models
  • Non-CO₂ Projections and Abatement Models
  • Forestry and Agricultural Sector Optimization Model - Greenhouse Gas Version (FASOMGHG)
  • Global Timber Model (GTM)
• Integrated Assessment Model
  • Mini-Climate Assessment Model (MiniCAM)
• Detailed Electricity Sector Model
  • Integrated Planning Model (IPM)

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The ADAGE Model

ADAGE is a dynamic computable general equilibrium (CGE) model capable of investigating economic policies at the international, national, U.S. regional, and U.S. state levels. CGE models such as ADAGE combine economic theory and empirical data to estimate policy effects, while accounting for all interactions among businesses and consumers.

Here is a picture of the ADAGE model:

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What's the picture at the top of the page? It's the EPA Climate Economics logo.

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More Resources

HERE is a supplementary discussion on the Climate Portal.

There is information in the links below on these topics:

• Carbon tax

• Carbon credit

• Carbon finance

• Emissions trading

• Energy model

• CDM Gold Standard

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Carbon Productivity

HERE is a report  The carbon productivity challenge: Curbing climate change and sustaining economic growth by McKinsey & Company.

Any successful program of action on climate change must support two objectives—stabilizing atmospheric greenhouse gases (GHGs) and maintaining economic growth. Research by the McKinsey Global Institute and McKinsey's Climate Change Initiative finds that reconciling these two objectives means that "carbon productivity," the amount of GDP produced per unit of carbon equivalents (CO₂e) emitted, must increase dramatically.

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Contrarian / Industry Reports

• Industry Reports Attacking Clean Air Rules Earn Poor Grades from Professors

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