Peter Michaelis, Heiko Wirths
DICE-RD: An Implementation of Rate-Related Damages
in the DICE model
Abstract:
A
growing body of literature from the natural and the social sciences
indicates that the rate of temperature increase is another key driver
of total climate damages, next to the absolute increase in temperature
compared to the pre-industrial level. Nonetheless, the damage functions
employed in integrated assessment models that aim at studying the
economics of climate change are usually based on the absolute
temperature increase alone. Hence, these models neglect additional
damag-es that will occur if the rate of temperature increase exceeds a
certain threshold that overstrains the adaptive capacities of
ecological and social systems. In the present paper, we implement such
rate-related damages in the well-known integrated assessment model
DICE-2016R. Using the resulting model variant DICE-RD we show for
several different scenarios that an insufficient climate policy that
ignores rate-related damages can lead to substantial economic losses.
JEL: O44, Q54, Q58
Paper:
Paper available as pdf-file.
Beitrag Nr. 337, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Peter Michaelis, Faculty of Business and Economics, University of
Augsburg, Germany.
D-86135
Augsburg,
Germany. phone +49-821-598-4057, fax +49-821-598-4217, email: peter.michaelis@wiwi.uni-augsburg.de
Heiko Wirths, Amprion GmbH, Dortmund, Germany. E-Mail: heikowirths@yahoo.de
Bo.,
27.06.2019