Climate Change Policy: What Do the Models Tell Us?

By Robert S. Pindyck. 2013

429 citations recorded by the source corpus.

Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of carbon (SCC) and evaluate alternative abatement policies. These models have crucial flaws that make them close to useless as tools for policy analysis: certain inputs (e.g. the discount rate) are arbitrary, but have huge effects on the SCC estimates the models produce; the models' descriptions of the impact of climate change are completely ad hoc, with no theoretical or empirical foundation; and the models can tell us nothing about the most important driver of the SCC, the possibility of a catastrophic climate outcome. IAM-based analyses of climate policy create a perception of knowledge and precision, but that perception is illusory and misleading.

Subfields: Economics and Econometrics, Management, Monitoring, Policy and Law

View Paper: https://www.semanticscholar.org/paper/940734ab161f298a14ef0bfa8900a77c265d2e71

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Citations in the corpus

What Do We Learn from the Weather? The New Climate-Economy Literature (2014, positive): “correct functional form for the loss function, even small impacts on productivity growth could, over time, swamp effects on the level of output (Pindyck 2013).”
The Heat Is on: A Framework for Measuring Financial Stress Under Disruptive Energy Transition Scenarios (2019, neutral): “…emissions, the level of discount rates, the damage function, or the adaptation costs, will easily affect the overall conclusions (see, e.g., discussions in Stern (2007), Goulder and Pizer (2008), Pindyck (2013), Gillingham et al. (2015), Brock and Hansen (2018), Batten (2018), or Nordhaus (2018)).”
When starting with the most expensive option makes sense: Optimal timing, cost and sectoral allocation of abatement investment (2018, neutral): “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”
100% Clean and Renewable Wind, Water, and Sunlight All-Sector Energy Roadmaps for 139 Countries of the World (2017, neutral): “Van den Bergh and Botzen (2015), Pindyck (2013), and Stern (2013) provide critical reviews of the main models used to generate estimates of the SCC.”
Reflections—Temperature Stress and the Direct Impact of Climate Change: A Review of an Emerging Literature (2016, neutral): “The importance of this issue for policy is in part a product of continued uncertainty regarding the true social cost of carbon (Pindyck 2013), which currently does not account for possible labor productivity impacts of climate change (Tol 2009; Burke, Hsiang, and Miguel 2015).”
A retrospective analysis of benefits and impacts of U.S. renewable portfolio standards (2016, neutral): “…(IPCC 2014b; Tol 2011; Weyant 2014), leading some to suggest possible improvements to SCC estimates and procedures (Ackerman and Stanton 2012; Arrow et al. 2013; Johnson and Hope 2012; Kopp et al. 2012; Pizer et al. 2014; Weyant 2014) or even to question the use of these estimates (Pindyck 2013).”