On the social cost of carbon and discounting in the DICE model-Reference-Cited by-同舟云学术

On the social cost of carbon and discounting in the DICE model

Published:2024 Issue:3 Volume:11 Page:471-495
ISSN:2372-0352
Container-title:AIMS Environmental Science
language:
Short-container-title:AIMSES

Author:

Braun Philipp¹,Faulwasser Timm²,Grüne Lars³,Kellett Christopher M.¹,Semmler Willi⁴,Weller Steven R.⁵

Affiliation:

1. School of Engineering, The Australian National University, Canberra, Australia

2. Institute of Energy Systems, Energy Efficiency and Energy Economics, Technische Universität Dortmund, Dortmund, Germany and Institute of Control Systems, Hamburg University of Technology, Hamburg, Germany

3. Mathematisches Institut, Universität Bayreuth, Bayreuth, Germany

4. New School for Social Research, New York, USA, and University of Bielefeld, Bielefeld, Germany, and International Institute for Applied Systems Analysis, Austria

5. School of Engineering, University of Newcastle, Newcastle, Australia

Abstract

The social cost of carbon (SCC) has emerged as one of the relevant measures in integrated assessment models in climate economics, to quantify costs related to global warming and climate change. While the SCC is used in different models, including DICE (Dynamic Integrated model of Climate and Economy), PAGE (Policy Analysis of the Greenhouse Effect), and FUND (Climate Framework for Uncertainty, Negotiation, and Distribution), its exact definition and computation depend on the reference and, frequently lacking consistency within research streams whether focusing on a single model or on different models. In this study, we investigated three different methods for the computation of the SCC using the integrated assessment model DICE. While the first two methods are commonly known and used, the novel formula derived for the third method allows a direct analysis of the impact of the discount factor in the calculation of the SCC. We provide a detailed proof for the correctness of the third method and validate the consistency of all three methods by numerical experiments.

Publisher

American Institute of Mathematical Sciences (AIMS)

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