Valuing Climate Damages Updating Estimation of the Social Cost of Carbon Dioxide (2017) / Chapter Skim
Currently Skimming:
5 Damages Module
5 Damages Module
Pages 129-156
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 129... ...
The first section below reviews the damage components of the integrated assessment models used to estimate the social cost of carbon (SCIAMs) .1 The second section discusses alternate approaches to estimating climate damages as well as some of the recent literature on damage estimation.
|
From page 130... ...
All three SC-IAM damage components take global mean temperature, global mean sea level, and socioeconomic projections (global population and GDP) as inputs for computing damages.
|
From page 131... ...
wetland loss, based on an internal cost-benefit rule for optimal adaptation Drivers of Sea Global mean sea Global mean sea Global mean sea Level Rise Damage level rise, income level rise, dryland level rise, regional value, wetland coast length scaling value, topography, factor relative to protection cost, European Union, population density, adaptation capacity income density, per and costs, per capita capita income income, income Non-Sea Level Quadratic Uniquely Power function of Rise Damage function of global formulated regional temperature Specifications temperature nonlinear functions (Fraction of by sector (see Income) Anthoff and Tol, 2014)
|
From page 132... ...
of certain sectoral economic benefits damage functions at low levels of (e.g., avoided warming heating demand, agriculture benefits from CO2 fertilization) Damages Due to Included in No explicit Unspecified Abrupt Climate calibration of representation "discontinuity" Change aggregate damages impact occurs with a not from sea level positive probability rise*
|
From page 133... ...
DICE and PAGE yield higher damages for a given level of warming and income and TABLE 5-2 Literature Sources for Current SC-IAM Damage Component Specifications Model Basis for Damage (Version) Damage Type Study Estimate DICE 2010a Aggregate non- Literature surveys Calibration sea level rise Intergovernmental Panel on Climate Change (2007a)
|
From page 134... ...
Income elasticity Water resources Downing et al.
|
From page 135... ...
. DICE global damages have historically been calibrated to the aggregate results of another model, RICE, which has regional and sectoral damage calibrations.
|
From page 136... ...
This sensitivity analysis misses some cumulative damage effects over time (e.g., in DICE, sea level rise and reductions in capital stock and GDP)
|
From page 137... ...
The results in Figure 5-1 reflect differences across models in the modeling of sea level, regional temperatures, and damages, which are all driven by global average temperature change in the models (see Table 5-1)
|
From page 138... ...
None of the damage components fully satisfies all the criteria. Analysis of the IWG documentation, individual model documentation, and outside research suggest a number of elements in the current damage functions, individual model results, and damage components as a whole that can be improved.
|
From page 139... ...
The scientific literature has produced studies of damages and impacts using physical process models, structural economic models, and empirical models. • Physical process models describe the dynamics of a physical pro cess to identify a climate change–induced physical impact and evaluate its implications: for example, crop models assess the impact of temperature, precipitation, CO2 concentrations, and other drivers on plant productivity.
|
From page 140... ...
cyclones, sea level rise, drought and conflict Sea level rise, agricultural Global Roson and Sartori (2010, productivity, heat effects on 2016) labor productivity, human health, tourism flows and households' energy demand
|
From page 141... ...
Since the studies that are used to calibrate the SC-IAMs were conducted, there has been significant progress in research into both market and nonmarket damages, and in methods using both empirical and structural models. In the future, the calibration of damage functions needs to be compared to point estimates from newer literature as either validation of or justification for updates; and, where possible, assessment of the damage calibration using hindcasting and comparisons to empirical
|
From page 142... ...
and include the following four additional improvements: 1. Individual sectoral damage functions should be updated as feasible.
|
From page 143... ...
. Updating Individual Sectoral Damage Functions As discussed above, research on climate damages has advanced beyond the studies underlying the current SC-IAM damage components.
|
From page 144... ...
For DICE 2010, for example, adequate documentation would mean a clear description of the calibration of the global sea level rise and non-sea-level rise damage functions, as well as details regarding any underlying calibrations at the sector and regional levels. For FUND and PAGE, adequate documentation would entail a clear description of the calibration of the region-sector damage functions.
|
From page 145... ...
The reliance on damage components of other SC-IAMs is more problematic. This reliance induces dependence among the models that affects the extent to which structural uncertainty is captured by using multiple models.
|
From page 146... ...
Pooling estimates from multiple models yields multiple estimates that differ at least in part because of structural uncertainty that is represented by the alternative models. If the model-specific errors of two or more models are positively correlated, however, pooling estimates across these models yields less variation in the esti mates than if the errors are independent.
|
From page 147... ...
and has the following five features: 1. It should disaggregate market and nonmarket climate dam ages by region and sector, with results that are presented in both monetary and natural units and that are consistent with empirical and structural economic studies of sectoral impacts and damages.
|
From page 148... ...
. FUND takes the second approach, with individual reduced-form damage functions for a range of sectors and impact types: agriculture, forestry, water resources and energy consumption, costs of protection against sea level rise, willingness to pay to avoid ecosystem loss, diarrhea, vector-borne diseases, cardiovascular disease, and tropical and extratropical storm damage (Anthoff and Tol, 2014)
|
From page 149... ...
Structural economic and empirical models, such as those listed in Table 5-3, provide the main resource for calibrating damage formulations. Due to the detailed representation of the weather and climate links to impacts, using either structural economic or empirical models to project future changes requires a high level of spatial and temporal detail in climate and, possibly, in socioeconomic projections, comparable to the level of detail in the past observations with which they are being compared.
|
From page 150... ...
The relationship between temperature exposure and crop yields depends strongly on whether crops are irrigated (Schlenker and Roberts, 2009; Houser et al., 2015) ; the ability to irrigate will in turn depend on impacts on water resources.
|
From page 151... ...
. Many are based on structural economic models of a sector or specific climate effect.
|
From page 152... ...
Using a CGE model, Bosello and colleagues (2007) found that the indirect costs of sea level rise, mediated by land loss or the capital market effects of protective investments, are comparable in scale to the direct effects.
|
From page 153... ...
The SC-IAM damage functions, and those in many other climate effects studies, represent climate damage as a function of global and regional mean temperature. However, climate change damages are often the effect of extreme events (e.g., a heat wave, storm, drought, or flood)
|
From page 154... ...
. Some structural economic models of climate impacts are well suited to consider the adaptation response.
|
From page 155... ...
propose an approach that includes using critical threshold scenarios in physical and empirical models to assess the potential impacts of crossing critical thresholds, together with structured expert elicitation to assess the probability of crossing those thresholds. A research program on critical thresholds, as well as on physical and economic modeling frameworks that incorporate them, would improve the capacity to integrate them into the SC-CO2 estimation framework.
|
From page 156... ...
• In the long term, research priorities that could yield particu lar benefits for SC-CO2 estimation would include omitted critical thresholds in natural and socioeconomic systems: - development of simple Earth system model or full com plexity Earth system model scenarios in which poten tial critical thresholds of tipping elements (e.g., Atlantic meridional overturning circulation, monsoonal circula tion patterns, sea ice, polar ice sheets) are crossed, and the use of the physical changes in these scenarios to drive models that assess impacts and damages; - mpirical observation-based and structural modeling e studies of the potential for climate change to drive the crossing of critical thresholds in socioeconomic systems and of their ensuing damages; and - expert elicitation studies of the likelihood of different tipping element scenarios, in order to allow tipping ele ments and their critical thresholds to be represented probabilistically in the SC-CO2 framework.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.