Valuing Climate Damages Updating Estimation of the Social Cost of Carbon Dioxide (2017) / Chapter Skim
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3 Socioeconomic Module
3 Socioeconomic Module
Pages 61-84
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From page 61... ...
It also includes a survey of the resources available for the task, including scenario databases, models of the economy and emissions, means of extracting information from historical data, and expert elicitation. An illustration of an improved method for projecting population, economic activity, and emissions that could be applied in the near term, with a focus on characterizing uncertainty in the variables to be used in the climate and damages modules is provided.
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From page 62... ...
One of the five scenarios involves atmospheric stabilization at a radiative forcing equivalent to 550 ppm CO2 by 2100, and thus assumes moderately strict mitigation measures. The IWG extended each of these scenarios to 2300 to capture the persistence of climate change and its associated net damages, assuming that growth rates of population and per capita GDP in each scenario decline linearly to zero in 2300.
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From page 63... ...
The first deals with disaggregation of global totals. As discussed further below, historical experience and expert judgment provide a basis for computing a probability density function for both global average per capita GDP growth over time and for global population that are consistent with alternative economic growth projections.
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From page 64... ...
• Time horizon: The socioeconomic projections should extend far enough in the future to provide inputs for estimation of the vast majority of discounted climate damages. • Future policies: Projections of emissions of CO2 and other important forcing agents should take account of the likeli hood of future emissions mitigation policies and techno logical developments.
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From page 65... ...
Another analysis (Bosetti et al., 2015) imposed uncertainty in the cost parameters of key technolo 2An example is the set of models that contributed to the Fifth Assessment Report's Working Group III scenario database (Intergovernmental Panel on Climate Change, 2014b, Annex II, Table AII.14)
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From page 66... ...
. The IPCC scenario libraries are a rich scientific resource with large numbers of scenarios (e.g., more than 1,000 in Intergovernmental Panel on Climate Change, 2014c)
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From page 67... ...
. Furthermore, scenario libraries, including the shared socioeconomic pathways, do not provide sectoral disaggregation, and they also typically extend only to 2100, even though projections beyond 2100 are important determinants of current SC-CO2 estimates.
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From page 68... ...
However, as we discuss below, they may be helpful in disaggregating projections of global population and GDP to regional or sectoral scale. Using Historical Data and Expert Judgment for Long-Term Economic Projections Scenarios are intended to provide an internally consistent description of a potential future, conditional on initial conditions and structural assumptions about economic system dynamics.
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From page 69... ...
Emissions projections without accounting for any mitigation policy can generally gain less from historical data, since there has historically been little scientific and policy attention to climate change. However, using historical emissions information to develop a no-mitigation projection might be a useful input to an expert elicitation of future emission projections, which is the subject of the next section.
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From page 70... ...
develop probabilistic population projections; (3) use expert elicitation to produce projections of future emissions; and (4)
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From page 71... ...
In contrast, economic and population growth are observable and so a probabilistic projection approach based on historical data is appropriate for them. Emissions projections fall somewhere in between, because while historic emissions are observable, future emissions are subject to considerable policy influence.
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From page 72... ...
For a measure of per capita GDP growth from 1870 to 2010, we used the subset of 25 countries in Barro and Ursua (2008a, 2008b) : these countries collectively accounted for 63 percent of global GDP in 1950, but for only 46 percent of global GDP by 2009.
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From page 73... ...
It is easier to communicate a smaller number of discrete growth rate possibilities. It is also useful for connecting economic projections with population and emissions projections that involve expert elicitation conditional on the economic projections.
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From page 74... ...
Estimates of the extent of difference with the past experience could be elicited, and the statistically derived distribution modified accordingly. Develop Probabilistic Population Projections Projections of population growth can take advantage of its underlying dependence on fertility and mortality rates and the age structure of society.
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From page 75... ...
Combining population projections with each of the growth rates of per capita income would yield a relatively small set of projections of population and GDP that can be treated as equally likely and representative of the corresponding joint probability density function. Use Expert Elicitation to Produce Projections of Future Emissions The SC-CO2 estimates are intended to be used in U.S.
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From page 76... ...
Instead, the committee believes there is no real alternative to relying on the judgment of experts with knowledge of both political and diplomatic processes in the United States and other nations and of technical challenges to reducing emissions. In applying expert elicitation, as discussed in Appendix C, it would be useful for expert judgments to be informed by historical data and information about the emissions trajectories associated with different levels of climate stabilization.
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From page 77... ...
In the case of population, the possibility of using existing regional and national population projections is also discussed. The first approach would be to estimate median GDP shares for each identified region, over time, using a particular scenario library.
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From page 78... ...
It also provides a potential mechanism to vary disaggregation across global growth projections. However, choices about near-term damage modeling may require regional resolution beyond what is available in scenario libraries, so there is the potential need for additional disaggregation.
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From page 79... ...
provides country and regional probabilistic projections that could be used to develop regional projections consistent with the set of global projections. However, it would then make sense to extract GDP per capita by region from the source of regional economic detail -- a scenario library or single model -- rather than GDP shares.
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From page 80... ...
• Work with demographers who have produced probabilistic projections through 2100 to create a small number of popu lation projections beyond 2100 to represent a probability density function. Development of such projections should include both the extension of existing statistical models and the elicitation of expert opinion for validation and adjust ment, particularly after 2100.
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From page 81... ...
In addition, understanding the net damage of climate change may require an elaboration of the four-module structure of Figure 2-1, to take more explicit account of phenomena such as climate effects on biological productivity and land use, changes in regional water availability, and the implications of human adaptation to rising temperatures and all of its associated impacts. And, most challenging, the methods and models used to prepare socioeconomic projections tend to be focused on the current century, whereas projections into subsequent centuries are required for the SC-CO2 estimation.
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From page 82... ...
RECOMMENDATION 3-3 In the longer term, the Interagency Working Group should engage in the development of a new socioeconomic module, based on a detailed-structure model, that meets the criteria of scientific basis, uncertainty character ization, and transparency, is consistent with the best available judgment regarding the probability distributions of uncertain parameters and that has the following characteristics: • provides internally consistent probabilistic projections, consistent with elicited expert opinion, as far beyond 2100 as required to capture the vast majority of discounted dam ages, taking into account the increased uncertainty regard ing technology, policies, and social and economic structures in the distant future; • provides probabilistic regional and sectoral projections consistent with requirements of the damage module, tak ing into account historical experience, expert judgment, and increasing uncertainty over time regarding the regional and sectoral structure of the global economy; • captures important feedbacks from the climate and damage modules that affect capital stocks, productivity, and other determinants of socioeconomic and emissions projections.
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From page 83... ...
Though an effort to build a detailed-structure model suitable for SC-CO2 estimation could usefully build on one or more existing models, it would be best if supported by a program of research on economic modeling frameworks and model development. CONCLUSION 3-1 Research on key elements of long-term economic and energy models and their inputs, focused on the particular needs of socioeconomic projections in SC-CO2 esti mation, would contribute to the design and implementation of a new socioeconomic module.
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From page 84... ...
There are costs as well as benefits of the committee's recommended approach to improved socioeconomic projections. Developing an SC-CO2 estimation framework with a more tightly integrated socioeconomic module will take time -- likely more than the 2-3 years that this report defines as the near term.
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