Multi-objective Optimal Control of Dynamic Integrated Model of Climate and Economy: Evolution in Action

TL;DR

This paper extends the DICE climate-economy model to a multi-objective framework, balancing economic welfare and temperature control, and demonstrates the advantages of Pareto optimization over traditional single-objective methods.

Contribution

It introduces a bi-objective optimal control formulation for the DICE model and applies NSGA-II to generate a diverse set of optimal solutions, enhancing the understanding of trade-offs.

Findings

Pareto front rediscovering previous results

Generalization to a wide range of solutions

Temperature deviation has a lower limit without technological breakthroughs

Abstract

One of the widely used models for studying economics of climate change is the Dynamic Integrated model of Climate and Economy (DICE), which has been developed by Professor William Nordhaus, one of the laureates of the 2018 Nobel Memorial Prize in Economic Sciences. Originally a single-objective optimal control problem has been defined on DICE dynamics, which is aimed to maximize the social welfare. In this paper, a bi-objective optimal control problem defined on DICE model, objectives of which are maximizing social welfare and minimizing the temperature deviation of atmosphere. This multi-objective optimal control problem solved using Non-Dominated Sorting Genetic Algorithm II (NSGA-II) also it is compared to previous works on single-objective version of the problem. The resulting Pareto front rediscovers the previous results and generalizes to a wide range of non-dominant solutions to minimize the global temperature deviation while optimizing the economic welfare. The previously used single-objective approach is unable to create such a variety of possibilities, hence, its offered solution is limited in vision and reachable performance. Beside this, resulting Pareto-optimal set reveals the fact that temperature deviation cannot go below a certain lower limit, unless we have significant technology advancement or positive change in global conditions.