Working Paper: NBER ID: w19244
Authors: Robert S. Pindyck
Abstract: 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.
Keywords: Climate Change; Social Cost of Carbon; Integrated Assessment Models
JEL Codes: D81; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| GHG emissions (Q54) | atmospheric GHG concentrations (Q54) |
| atmospheric GHG concentrations (Q54) | temperature changes (Q54) |
| temperature changes (Q54) | economic welfare measures (output and consumption) (E29) |
| arbitrary inputs (C69) | SCC estimates (C13) |
| IAMs (F53) | misleading perceptions of knowledge and precision (D83) |
| climate sensitivity and economic damage function (Q54) | SCC estimates (C13) |