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

Title data

Braun, Philipp ; Faulwasser, Timm ; Grüne, Lars ; Kellett, Christopher M. ; Semmler, Willi ; Weller, Steven R.:
On the social cost of carbon and discounting in the DICE model.
Bayreuth ; Newcastle , 2024 . - 22 p.
DOI: https://doi.org/10.15495/EPub_UBT_00007609

Official URL: Volltext

Abstract in another language

The social cost of carbon (SCC) has emerged as one of the relevant measures in integrated assessment models in climate economy, 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 depends on the reference and frequently lacks consistency within research streams focusing on a single or on different models. In this paper, we investigate 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 all three methods by numerical experiments.

Further data

Item Type: Preprint, postprint
Keywords: economics of climate change; DICE; optimal control; social cost of carbon; sensitivity analysis
Institutions of the University: Faculties
Faculties > Faculty of Mathematics, Physics und Computer Science
Faculties > Faculty of Mathematics, Physics und Computer Science > Department of Mathematics
Faculties > Faculty of Mathematics, Physics und Computer Science > Department of Mathematics > Chair Mathematics V (Applied Mathematics)
Faculties > Faculty of Mathematics, Physics und Computer Science > Department of Mathematics > Chair Mathematics V (Applied Mathematics) > Chair Mathematics V (Applied Mathematics) - Univ.-Prof. Dr. Lars Grüne
Faculties > Faculty of Mathematics, Physics und Computer Science > Department of Mathematics > Chair Applied Mathematics
Profile Fields
Profile Fields > Advanced Fields
Profile Fields > Advanced Fields > Nonlinear Dynamics
Research Institutions > Central research institutes > Bayreuth Research Center for Modeling and Simulation - MODUS
Research Institutions
Research Institutions > Central research institutes
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
500 Science > 510 Mathematics
Date Deposited: 23 Mar 2024 22:01
Last Modified: 25 Mar 2024 07:15
URI: https://eref.uni-bayreuth.de/id/eprint/89019