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Climate–economics models

Climate–economics models 26 January 2021

Study: Accounting for value of nature reinforces Paris climate targets

Dana Nuccitelli via Yale Climate Connections

Climate–economics models (IAMs) are said to grossly underestimate costs of climate damages to natural systems, such as flood protection and healthy ecosystems.

A new study in Nature Sustainability incorporates the damages that climate change does to healthy ecosystems into standard climate–economics models. The key finding in the study by Bernardo Bastien–Olvera and Frances Moore from the University of California at Davis: The models have been underestimating the cost of climate damages to society by a factor of more than five.

Their study concludes that the most cost–effective emissions pathway results in just 1.5 degrees Celsius (2.7 degrees Fahrenheit) additional global warming by 2100, consistent with the “aspirational” objective of the 2015 Paris Climate Agreement.

Models that combine climate science and economics, called “integrated assessment models” (IAMs), are critical tools in developing and implementing climate policies and regulations. In 2010, an Obama administration governmental interagency working group used IAMs to establish the social cost of carbon – the first federal estimates of climate damage costs caused by carbon pollution. That number guides federal agencies required to consider the costs and benefits of proposed regulations.

Given the importance of the social cost of carbon to federal rulemaking, some critics have complained that the Trump EPA used what they see as creative accounting to slash the government’s estimate of the number. In one of his inauguration day Executive Orders, President Biden established a new Interagency Working Group to re–evaluate the social cost of all greenhouse gases.

IAMs often have long been criticized by those convinced they underestimate the costs of climate damages, in some cases to a degree that climate scientists consider absurd.

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