> More detail on that DICE-99 model implications. See these:
This is a very ambitious study, combining a climate model with an economic
model. I can't help being skeptical about whether the researchers have
bitten off more than they can chew.
Climate modelling itself is a highly active field with many different
models in use. Nordhaus is an economist, not a physicist. His "three
box" model (atmosphere, biosphere, ocean) is much simpler than the full
models being run. He says that he gets about the same results, but if
so then that would suggest that the more complex models aren't really
necessary, wouldn't it? That doesn't sound right.
His economic model seems even more questionable. From page 2-5:
The world is composed of several regions. Some regions consist of a
single sovereign country (such as the U.S.) while other regions
(like OECD Europe or the Low Income Region) contain many countries.
Skipping to page 2-6:
Each region is assumed to produce a single commodity which can be
used for either consumption or investment. In the model, all changes
in welfare, including those due to climate change, are included in
our definition of consumption of this single commodity. Thus, we will
sometimes refer to consumption of this all-inclusive commodity as
There is no international trade in goods or capital except in exchange
for carbon emissions permits. That is, we allow regions to trade only
for the sake of paying other regions to lower their emissions or to
receive payment for lowering emissions.
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...
("Exogenous" means that these factors are built explicitly into the
model and aren't affected by the changes within it.)
The authors comment about the fact that there aren't really any models
around that attempt to show economic growth through the course of the
21st century. Hence they had to create one. But how much credibility
does a model have which assumes only one commodity, no significant
international trade, and that technology and population growth are
independent of economic activity?
Page 2-17 describes their model of technological growth. Aj(t) is the
technology factor, also called "total factor productivity":
A major uncertainty in the model involves projecting the growth of
Aj(t), or total factor productivity (TFP), into the future. TFP
growth is assumed to slow gradually over the next three centuries
until eventually stopping.
You read it right. Technology growth is assumed to slow and then stop.
This is a highly questionable assumption which of course would represent
a complete reversal of historical trends. I stopped reading after
For those interested in pursuing it, his model is available for
download as an Excel spreadsheet. It would be interesting to plug in
some more aggressive growth scenarios and see if it alters his results
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