Climate Change Policy: What Do the Models Tell Us?
Journal of Economic Literature
no. 3, September 2013
Very little. A plethora of integrated assessment models (IAMs) have been constructed
and used to estimate the social cost of carbon (SCC) and evaluate alternative
abatement policies. These models have crucial flaws that make them close to useless
as tools for policy analysis: certain inputs (e.g., the discount rate) are arbitrary, but
have huge effects on the SCC estimates the models produce; the models' descriptions
of the impact of climate change are completely ad hoc, with no theoretical or empirical
foundation; and the models can tell us nothing about the most important driver of the
SCC, the possibility of a catastrophic climate outcome. IAM-based analyses of climate
policy create a perception of knowledge and precision, but that perception is illusory
Pindyck, Robert S.
"Climate Change Policy: What Do the Models Tell Us?"
Journal of Economic Literature,
Model Construction and Estimation
Climate; Natural Disasters; Global Warming
Environmental Economics: Government Policy