Casting DICE for 350 ppm

The DICE model of climate economics, using its default assumptions and inputs, projects that the optimal climate policy is a gradual abatement of greenhouse gas emissions. In this paper, the authors explore alternative assumptions and inputs under which DICE might recommend beginning abatement more rapidly, and stabilising atmospheric concentrations near 350 ppm carbon dioxide (CO₂).

They start with several small technical adjustments to the DICE-2007 model, updating its population projections, and updating and partially endogenising the effects of non-CO₂ greenhouse gases, as well as lowering its discount rate to place greater emphasis on intergenerational equity. They then conduct sensitivity analyses varying the parameters for climate sensitivity, damage function exponent, and the cost of achieving 100-percent emissions abatement.

They find that DICE’s optimal policy recommendation changes markedly when inputs are varied within the range of likely values in the current literature. At the higher end of the current range of estimates for two key parameters, DICE calculates that human welfare is maximised by keeping peak temperature increases very low, and achieving a completely emission-free world economy within half a century.

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