Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/216518
Authors: 
Dietz, Simon
van der Ploeg, Rick
Rezai, Armon
Venmans, Frank
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper 8122
Abstract: 
We show that several of the most important economic models of climate change produce climate dynamics inconsistent with the current crop of models in climate science. First, most economic models exhibit far too long a delay between an impulse of CO2 emissions and warming. Second, few economic models incorporate positive feedbacks in the carbon cycle, whereby carbon sinks remove less CO2 from the atmosphere, the more CO2 they have already removed cumulatively, and the higher is temperature. These inconsistencies affect economic prescriptions to abate CO2 emissions. Controlling for how the economy is represented, different climate models result in significantly different optimal CO2 emissions. A long delay between emissions and warming leads to optimal carbon prices that are too low and too much sensitivity of optimal carbon prices to the discount rate. Omitting positive carbon cycle feedbacks also leads to optimal carbon prices that are too low. We conclude it is important for policy purposes to bring economic models in line with the state of the art in climate science.
Subjects: 
carbon cycle
carbon price
climate change
integrated assessment modelling
positive feedbacks
social cost of carbon
JEL: 
Q54
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.