Working Paper: NBER ID: w21637
Authors: Kenneth Gillingham; William D. Nordhaus; David Anthoff; Geoffrey Blanford; Valentina Bosetti; Peter Christensen; Haewon McJeon; John Reilly; Paul Sztorc
Abstract: The economics of climate change involves a vast array of uncertainties, complicating both the analysis and development of climate policy. This study presents the results of the first comprehensive study of uncertainty in climate change using multiple integrated assessment models. The study looks at model and parametric uncertainties for population, total factor productivity, and climate sensitivity. It estimates the pdfs of key output variables, including CO2 concentrations, temperature, damages, and the social cost of carbon (SCC). One key finding is that parametric uncertainty is more important than uncertainty in model structure. Our resulting pdfs also provide insights on tail events.
Keywords: Climate Change; Uncertainty; Integrated Assessment Models
JEL Codes: O44; Q48; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Uncertainty in population growth (J11) | Distribution of CO2 concentrations (D30) |
| Uncertainty in total factor productivity (O49) | Distribution of CO2 concentrations (D30) |
| Uncertainty in equilibrium climate sensitivity (D89) | Distribution of CO2 concentrations (D30) |
| Uncertainty in population growth (J11) | Distribution of temperature increases (D39) |
| Uncertainty in total factor productivity (D89) | Distribution of temperature increases (D39) |
| Uncertainty in equilibrium climate sensitivity (D89) | Distribution of temperature increases (D39) |
| Uncertainty in population growth (J11) | Distribution of social cost of carbon (SCC) (D39) |
| Uncertainty in total factor productivity (D89) | Distribution of social cost of carbon (SCC) (D39) |
| Uncertainty in equilibrium climate sensitivity (D89) | Distribution of social cost of carbon (SCC) (D39) |
| Higher uncertainty in parameters (D89) | Wider distribution of potential outcomes for temperature increases (D39) |
| Higher uncertainty in parameters (D89) | Wider distribution of potential outcomes for SCC (D39) |