Y-Axis 2

  • Policy
  • Climate
  • Economy
  • Technology
  • Fossil fuels
  • Welfare
  • Damages

Choose among four types of policies. Business as usual assumes that there are no controls on CO2 emissions. Choosing an optimized policy allows the computer to choose an emissions reduction plan that maximizes welfare (measured by the present value of utility). A simulated carbon tax allows you to pick a global tax rate on emissions for each of three periods. A climate treaty allows you to choose emissions reductions from a 2005 baseline for each of three target dates and the portion of world emissions that are subject to the treaty.

Be aware that optimized policies can take about ten seconds to run, depending on your input parameters—and a bit longer longer if you’re using a BEAM carbon cycle.

Tax rate
($/ton C)

  • 0 500
  • 0 500
  • 0 500

Emissions reduction
(% 2005 emissions)

  • 100 0
  • 100 0
  • 100 0

Sliders decrease in value, as smaller numbers indicate more aggressive emissions reductions.

(% of globe)

  • 0 100
  • 0 100
  • 0 100

How bad climate change will be? Climate sensitivity is a measure of how much temperatures will increase if CO2 in the atmosphere doubles. A higher sensitivity means a greater temperature increase for a given level of emissions. Climate model is the model of what happens to emissions once they are released. The DICE model is the model that is built into the standard version of DICE. BEAM is a slightly more realistic model that includes ocean chemistry. Linear is a simple but reasonably accurate model that is based on cumulate carbon emissions.

1 5

How much will temperatures go up? Or: how much will temperature increase in degrees C from a doubling of atmospheric CO2?

Climate model

How would the economy would perform without climate change? The model assumes that the productivity of the economy increases but the rate of increase slows over time. You can choose the rate of this slow down. Depreciation determines how fast assets wear out in the economy. Savings is the portion of output that is reinvested in the economy. The maximum population determines how many people the earth will eventually hold.

.05 1.5

Decline in the rate of growth in productivity over time.

8 20

Rate at which physical assets (buildings, machines, etc.) wear out.

15 25

Savings rate per year.

8.0 12.0

Maximum level of the global population, in billions.

How much will clean energy technology cost? You can choose both how fast clean energy costs will go down and how far they will go down. These costs determine the effects of an emissions reduction policy and do not come into play in the business as usual scenario.

2 4

Marginal cost of reducing emissions. This represents the additional costs from more abatement.

0 20

The rate of decline in costs of reduction emissions—hpw fast will these costs decline over time?

How fast will emissions go down due to efficiency improvements—and because of the limits to fossil fuel reserves. Energy intensity determines how efficient the economy is. As the economy becomes more efficient, it can produce more using less energy and, therefore, fewer emissions. The model assumes that the economy gets more efficient over time. You can choose how much more. Fossil fuels is the total recoverable fossil fuels, measured in gigatons of carbon.

0 6

Reduction in energy intensity per decade. Or the rate of decline in energy use per $ of GDP.

6000 9000

Fossil fuel reserves remaining, measured in CO2 emissions

Choose parameters that determine the individual utility function and the discount rate applied to future utility. Eta determines how fast marginal utility declines with income, with higher values meaning that utility increases less as people get richer. Rho is the discount rate applied to utility.

1 3

Elasticity of marginal utility. This is the exponent of consumption in the utility function.

1 3

Pure rate of time preference, and the discount rate applied to utility.

How will climate change harm the economy? The default model in DICE assumes that harms increase as temperatures increase by reducing usable output. Harms determines how fast they increase: harms are effectively the temperature increase raised to the exponent you choose. Model allows you to different functional forms or to allow climate change to effect the economy in a different way (such as reducing the growth rate of productivity rather than by reducing usable output).

1 4

How large will the harms to the climate be, due to an increase in temperatures?

Damages function

0 50
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