CLIMATE CHAOS - Bush's climate of fear (BBC report)

Candidone- A great model is found below:

DICE Again: The Economics of Global Warming




William Nordhaus and Joseph Boyer

October 1999

Overview





Global warming has become the major environmental policy issue of today. Concerns about the impact of global warming have increasingly been the subject of research and debate among natural and social sciences, and nations have undertaken a controversial new approach to curbing global environmental threats in the Kyoto Protocol of December 1997. The heir-apparent to the Democratic throne, Al Gore, has called global warming one of the major global issues of the 21st century.
Dealing with complex scientific and economic issues has increasingly involved developing scientific and economic models. Such models help analysts and decision makers understand likely future outcomes as well as the implications of alternative policies. In the economic literature, the DICE model (Dynamic Integrated model of Climate and the Economy) developed by Nordhaus was the first integrated-assessment model of the economics of climate change. This model developed an approach that links together from end to end the different facets of global warming. The new book presents the RICE-99 model -- the Regional Integrated model of Climate and the Economy -- a fully revised model of the economics of global warming that builds upon earlier work by the author and collaborators.

The purpose of the present study is to integrate scientific knowledge of the dynamics of climate change with our understanding of the economic aspects of emissions of greenhouse gases and damages from climate change. The study provides a full description of the methodology as well as an analysis of alternative approaches to climate-change policy

The analysis is laid out in six chapters. The first chapter gives a general introduction to the subject. The following chapter presents an overview of the RICE model, starting with a verbal description and following with a list of the equations. Chapters three and four provide a detailed description of the energy and economic sectors and of the environmental sectors. Chapter five provides some computational details, while the final chapter presents the major results and some the important conclusions. The Appendices provide a summary listing of the equations, a variable list, the regional definition, other summary tables, and the computer programs for the different models.

Summary of the Model and Analysis

We provide here a short overview of the approach and major results of the book. The basic approach taken in analyzing the economics of climate change is to consider the tradeoff between consumption today and consumption in the future. By taking steps to slow emissions of greenhouse gases (GHGs) today, the economy reduces the amount of output that can be devoted to consumption and productive investment. The return for this "climate investment" is lower damages and therefore higher consumption in the future. The purpose of the study is to capture the major tradeoffs involved in climate-change policy.

In the RICE-99 model, the world is composed of sovereign countries, represented by large countries (like the U.S. or India) or large regions (like the European Union or Africa). Each region is assumed to have a well-defined set of preferences by which it chooses its path for consumption over time. The welfare of different generations is combined using a social-welfare function that applies a pure rate of time preference to different generations. Nations are then assumed to maximize the social-welfare function subject to a number of economic and geophysical constraints. The decision variables that are available to the economy are consumption, the rate of investment in tangible capital, and the climate investments, primarily emissions reductions of greenhouse gases.

The model contains both a traditional economic sector, similar to that found in many economic models, and a geophysical module designed for climate-change modeling. In the economic sectors, each country or region is assumed to produce a single commodity which can be used for either consumption or investment. In the baseline model, there is no trade in goods or capital, but countries in certain cases trade rights for carbon emissions and receive consumption goods in return.

Each region is endowed with an initial stock of capital and labor and an initial and region-specific level of technology. Population growth and technological change are exogenous in the baseline model, while capital accumulation is determined by optimizing the flow of consumption over time. The RICE-99 model defines a new input into production called "carbon-energy." Carbon energy is the carbon equivalent of energy consumption and is measured in carbon units. CO2 emissions are therefore a joint product of carbon-energy. Technological change takes two forms: economy-wide technological change and energy-saving technological change. More precisely, economy-wide technological change is Hicks neutral, while energy-saving technological change is modeled as reducing the output-carbon elasticity.

We calibrate the production function using existing data on energy use, energy prices, and energy-use price elasticities. These allow an empirically-based carbon-reduction cost function, whereas most current integrated assessment models make "reasonable" but not empirically-based specifications of the cost schedule. In the RICE-99 model, a carbon supply curve is introduced. The model contains a supply curve for carbon-energy with carbon fuels available at rising costs. Because it employs the optimal-growth framework, fossil fuels are efficiently allocated, which implies that low-cost resources have scarcity rents and that the "Hotelling rents" on carbon-energy prices rise over time.

The environmental part of the model contains a number of geophysical relationships that link together the different forces affecting climate change. This part contains a carbon cycle, a radiative forcing equation, climate-change equations, and a climate-damage relationship. The geophysical sectors are simplified representations of more complex models. Although they have been built on first principles, the research shows that they track closely more elaborate models.

In the new models, endogenous emissions are limited to industrial CO2. Industrial emissions are treated as a joint product of carbon-energy. Other contributions to global warming are taken as exogenous. The new models contain a new structural approach to carbon-cycle modeling that uses a three-reservoir model calibrated to existing carbon-cycle models. Climate change is represented by global mean surface temperature, and the relationship uses the consensus of climate modelers and a lag suggested by coupled ocean-atmospheric models.

Understanding the economic impacts of climate change continues to be the thorniest issue in climate-change economics. The present study follows first-generation approaches by analyzing impacts on a sectoral basis. The approach is focused on estimates for all thirteen major regions rather than for the United States alone. Moreover, the new study focuses more heavily on the non-market aspects of climate change with particular importance given to the potential for catastrophic risk; this approach is taken because of finding that the impacts on market sectors are likely to be relatively limited. The major results are that impacts are likely to differ sharply by region. We estimate that Russia and other high-income countries (principally Canada) will benefit slightly from a modest global warming, while low income regions -- particularly Africa and India -- and Europe appear to be quite vulnerable to climate change. The United States appears to be relatively less vulnerable to climate change than many countries.

Major results

Three conclusions drawn from the larger study will give a flavor of the results of the new study.

The most important set of results is to compare the relative efficiency of different approaches to climate-change policy. The RICE model is the only major integrated-assessment model that integrates regional costs and damages and is therefore able to provide guidelines about how well different policies meet a cost-benefit test. According to the new study, a path that limits CO2 concentrations to no more than doubling of pre-industrial levels is close to the "optimal" or efficient policy. By contrast, current approaches, such as the Kyoto Protocol, are highly inefficient, with abatement costs approximately ten times their benefits in reduced damages. More ambitious proposals, such as those which cut CO2 emissions sharply in the near term, are highly inefficient.

Second, earlier versions of the DICE model have investigated the role of "carbon taxes," which are a measure of the stringency of global warming policies. This measure is a useful way of calibrating different climate-change policies. According to the RICE-99 model, the optimal carbon price in the near term is in the $5 to $10 per ton range. Policies which have near-term carbon prices in the $100 per ton range, such as those associated with the Kyoto Protocol, fail a cost-benefit test because they impose excessive near-term abatement. Moreover, all policies that are investigated that pass a cost-benefit test have near-term carbon taxes under $10 per ton.

Third, the revised RICE model paints a much less alarming picture of future climate change than the earlier climate-change models completed in the early 1990s. Whereas many studies projected baseline global temperature increases by 2100 in the 3 to 4 ºC range, a better guess for uncontrolled warming would be close to 2 ºC warming in 2100. It is interesting to compare the results of the new model with the earlier DICE model. The optimal carbon tax and control rate in the early periods in the two models are very close. However, the new RICE model has significantly slower growth in emissions, concentrations, and other greenhouse-gas forcings. The slower buildup of concentrations, along with the evidence of the cooling effect of other gases and the phaseout of the CFCs, implies that the baseline (no-control) global temperature increase for 2100 is 2.1 ºC in the RICE-99 model as compared to 3.3 ºC in the original DICE model. In addition, the new RICE model has higher controls than the original DICE model. Hence the optimized global temperature increase in 2100 is 2.0ºC in RICE-99 compared to 3.1 ºC in the original DICE model.

These three conclusions are but three of many examples of how the RICE-99 model can be fruitfully employed to investigate alternative future paths of climate change and to evaluate different policy proposals. The widespread dissemination of the results through publication will contribute to the advance of knowledge in this area and to the design of sensible public policies.


The advantage to Nordhaus's model, as I understand it, is that it takes into account BOTH THE COSTS AND BENEFITS of Business as Usual and compares them tothe COSTS AND BENEFITS OF heroic Co2 cuts.

Nordhaus has calculated that a 4 percent cut based on 1995 figures is the OPTIMAL CARBON REDUCTION FOR THE GLOBE. If an attempt, he says, is made on one hand, to cut nack more than 4 percent, it will be a net cost to society because cutting bnack the final tons above 4 percent costs more than the long term advantage gained by having a marginally lower temperature.

Nordhaus's approach is valid only if it the computer models of the IPCC are achieving verifiable results. If the IPCC's findings prove to be in erro then not as much money needs to be spent on reductions of CO2. The introduction of carbon trading( again, an approach loaded with difficulties) would make the US expeience much more benign.

George,



I'm sure a perusal of my past posts will reveal to you many, many examples of substantial arguments that I have advanced in support of my and others' positions. I agree with you that there is no winning or losing during a discussion (in fact, it's a point I have made several times to Brandon). Actually, I don't post here for anyone else's benefit but my own. It isn't about what I've 'offered' you at all, not to me, anyways; I don't feel any particular responsibility to engage anyone in any fashion, for I feel that in the end very few people will have their opinions changed by arguing on A2K, and it certainly doesn't affect the world in any way.

My post was referring to the larger feeling of frustration shown by Republican supporters here on A2K and elsewhere, as their political leaders have proven themselves inept at advancing the Conservative cause - and that's not my opinion, but the general opinion of many Conservatives online. I have also generally noticed a large drop in participation by Conservatives and self-proclaimed Republicans as time has gone on since Nov. 2004. As I said earlier, it's understandable; as the fortunes of one party wane, the other waxes, and the level of interest changes accordingly.

But, would this ever be admitted by those on the right (or perhaps the left, in the opposite situation?) No. Instead, it's 'the level of discourse has dropped' and 'there aren't quality opponents to debate any longer.'

It makes not a lick of difference to me what your opinion of my offerings is, just as I'm sure you feel the same way about my opinions. So what is the point of discussing opinions of each other's posts? Instead, let us go our seperate ways in peace, and bear the comments of the other with a smile, for that is what I do rather than get my feelings hurt.

Cycloptichorn

I wonder, if this website had been around 31 years ago, if we'd be wanting to spend katrillions to fix what many back then saw as global "cooling".

From Newsweek, April 27, 1975:

There are ominous signs that the Earth's weather patterns have begun to change dramatically and that these changes may portend a drastic decline in food production- with serious political implications for just about every nation on Earth. The drop in food output could begin quite soon, perhaps only 10 years from now. The regions destined to feel its impact are the great wheat-producing lands of Canada and the U.S.S.R. in the North, along with a number of marginally self-sufficient tropical areas - parts of India, Pakistan, Bangladesh, Indochina and Indonesia - where the growing season is dependent upon the rains brought by the monsoon.

The evidence in support of these predictions has now begun to accumulate so massively that meteorologists are hard-pressed to keep up with it. In England, farmers have seen their growing season decline by about two weeks since 1950, with a resultant overall loss in grain production estimated at up to 100,000 tons annually. During the same time, the average temperature around the equator has risen by a fraction of a degree - a fraction that in some areas can mean drought and desolation. Last April, in the most devastating outbreak of tornadoes ever recorded, 148 twisters killed more than 300 people and caused half a billion dollars' worth of damage in 13 U.S. states.

To scientists, these seemingly disparate incidents represent the advance signs of fundamental changes in the world's weather. The central fact is that after three quarters of a century of extraordinarily mild conditions, the earth's climate seems to be cooling down. Meteorologists disagree about the cause and extent of the cooling trend, as well as over its specific impact on local weather conditions. But they are almost unanimous in the view that the trend will reduce agricultural productivity for the rest of the century. If the climatic change is as profound as some of the pessimists fear, the resulting famines could be catastrophic. "A major climatic change would force economic and social adjustments on a worldwide scale," warns a recent report by the National Academy of Sciences, "because the global patterns of food production and population that have evolved are implicitly dependent on the climate of the present century."

A survey completed last year by Dr. Murray Mitchell of the National Oceanic and Atmospheric Administration reveals a drop of half a degree in average ground temperatures in the Northern Hemisphere between 1945 and 1968. According to George Kukla of Columbia University, satellite photos indicated a sudden, large increase in Northern Hemisphere snow cover in the winter of 1971-72. And a study released last month by two NOAA scientists notes that the amount of sunshine reaching the ground in the continental U.S. diminished by 1.3% between 1964 and 1972.

To the layman, the relatively small changes in temperature and sunshine can be highly misleading. Reid Bryson of the University of Wisconsin points out that the Earth's average temperature during the great Ice Ages was only about seven degrees lower than during its warmest eras - and that the present decline has taken the planet about a sixth of the way toward the Ice Age average. Others regard the cooling as a reversion to the "little ice age" conditions that brought bitter winters to much of Europe and northern America between 1600 and 1900 - years when the Thames used to freeze so solidly that Londoners roasted oxen on the ice and when iceboats sailed the Hudson River almost as far south as New York City.

Just what causes the onset of major and minor ice ages remains a mystery. "Our knowledge of the mechanisms of climatic change is at least as fragmentary as our data," concedes the National Academy of Sciences report. "Not only are the basic scientific questions largely unanswered, but in many cases we do not yet know enough to pose the key questions."

Meteorologists think that they can forecast the short-term results of the return to the norm of the last century. They begin by noting the slight drop in overall temperature that produces large numbers of pressure centers in the upper atmosphere. These break up the smooth flow of westerly winds over temperate areas. The stagnant air produced in this way causes an increase in extremes of local weather such as droughts, floods, extended dry spells, long freezes, delayed monsoons and even local temperature increases - all of which have a direct impact on food supplies.

"The world's food-producing system," warns Dr. James D. McQuigg of NOAA's Center for Climatic and Environmental Assessment, "is much more sensitive to the weather variable than it was even five years ago." Furthermore, the growth of world population and creation of new national boundaries make it impossible for starving peoples to migrate from their devastated fields, as they did during past famines.

Climatologists are pessimistic that political leaders will take any positive action to compensate for the climatic change, or even to allay its effects. They concede that some of the more spectacular solutions proposed, such as melting the Arctic ice cap by covering it with black soot or diverting arctic rivers, might create problems far greater than those they solve. But the scientists see few signs that government leaders anywhere are even prepared to take the simple measures of stockpiling food or of introducing the variables of climatic uncertainty into economic projections of future food supplies. The longer the planners delay, the more difficult will they find it to cope with climatic change once the results become grim reality.

Yes, indeed, Cyclopitchorn, the Republican leaders. as you say. have proven themselves 'inept at advancing the Conservative cause" - So inept that they won the elections of 2000, 2002, and 2004.

Winning is the only real validation.

On the other hand, the Left wing Democrats have REALLY PROVED themselves to be not only inept but certified LOSERS. Under the brilliant leadership of the fastest zipper in the US- William Jefferson Clinton- the Democrats LOST the House and the Senate in 1994 and have never regained either body except for a small period of time when a renegade tilted the balance.

Why don't you look at the only thing that really counts- Cyclopitchorn?

Who is in the seats of power and who has been there in the Congress since 1994?