The Structure of Economic Modeling of the Potential Impacts of Climate Change: Grafting Gross Underestimation of Risk onto Already Narrow Science Models

By N. Stern. 2013

524 citations recorded by the source corpus.

Scientists describe the scale of the risks from unmanaged climate change as potentially immense. However, the scientific models, because they omit key factors that are hard to capture precisely, appear to substantially underestimate these risks. Many economic models add further gross underassessment of risk because the assumptions built into the economic modeling on growth, damages and risks, come close to assuming directly that the impacts and costs will be modest and close to excluding the possibility of catastrophic outcomes. A new generation of models is needed in all three of climate science, impact and economics with a still stronger focus on lives and livelihoods, including the risks of large-scale migration and conflicts.

Subfields: Economics and Econometrics, Management, Monitoring, Policy and Law, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/0c05f9b4e3a2d0bac83b908be713a8f7e23afc29

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Citations in the corpus

What Do We Learn from the Weather? The New Climate-Economy Literature (2014, unknown): “match cross-sectional estimates of climate damages reviewed in Tol (2009) (see Nordhaus and Sztorc 2013) and then adjusts damages up by 25% to incorporate non-monetized damages, such as impacts on bio-diversity, and to account for potentially catastrophic scenarios, such as sea level rise, changes i”
Climate policy modeling: An online SCI-E and SSCI based literature review (2015, background): “Firstly, the main source of risk in climate modules is the omission of potentially key factors or effects, including thawing of the permafrost and release of methane, collapse of land-based polar ice sheets, release of sea-bed methane, and complex interaction with ecosystems and biodiversity more ge”
A Third Wave in the Economics of Climate Change (2015, background): “2001; Batty 2009), electricity markets (Weidlich and Veit 2008; Sun and Tesfatsion 2007), emissions trading markets (Zhang et al.”
The Economic Impacts of Climate Change (2018, background): “Some have argued in favor of particular parameter values (Stern 2008, 2010, 2013; van den Bergh and Botzen 2014, 2015), thus putting bounds on the social cost of carbon.”
When starting with the most expensive option makes sense: Optimal timing, cost and sectoral allocation of abatement investment (2018, background): “Due to the various scientific uncertainties surrounding climate change and resulting damages, assessing the benefits from climate mitigation is not straightforward (Manne and Richels, 1992; Ambrosi et al., 2003; Stern, 2013; Pindyck, 2013), and it is common to use targets expressed in global warming”
Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model (2018, unknown): “However, IAMs have been fiercely criticized by an increasing number of scholars for their simplifying assumptions (see Pindyck, 2013; Stern, 2013, 2016; Weitzman, 2013; Revesz et al., 2014; Farmer et al., 2015; Balint et al., 2017, among many contributions).”
Path dependence, innovation and the economics of climate change (2014, background): “Indeed, standard integrated assessment models suffer from a variety of problems, such as extreme sensitivity to arbitrary parameters and the inability to properly incorporate the possibility of catastrophic outcomes (Pindyck, 2013; Stern, 2013; Weitzman, 2013; Dietz and Stern, 2014).”
Let's Talk About the Weather: The Impact of Climate Change on Central Banks (2016, background): “2) A reduction in the rate of productive capital accumulation, through permanent or long- term damage to capital and land (Stern, 2013) or increase in the rate of capital depreciation (Frankhauser and Tol, 2005).”