The climate in climate economics
Doris Folini, Felix K\"ubler, Aleksandra Malova, Simon Scheidegger

TL;DR
This paper develops a transparent calibration strategy for climate emulators used in climate economics, demonstrating how calibration choices significantly impact the social cost of carbon and model predictions.
Contribution
It introduces a generic calibration and evaluation framework for climate emulators based on CMIP5 data, improving the accuracy and robustness of climate-economic models.
Findings
Calibrated the DICE-2016 climate component using multi-model mean.
Model uncertainty can alter the social cost of carbon by a factor of four.
Calibrated model shows less sensitivity to discount rates and predicts about one degree less warming.
Abstract
To analyze climate change mitigation strategies, economists rely on simplified climate models - climate emulators. We propose a generic and transparent calibration and evaluation strategy for these climate emulators that is based on Coupled Model Intercomparison Project, Phase 5 (CMIP5). We demonstrate that the appropriate choice of the free model parameters can be of key relevance for the predicted social cost of carbon. We propose to use four different test cases: two tests to separately calibrate and evaluate the carbon cycle and temperature response, a test to quantify the transient climate response, and a final test to evaluate the performance for scenarios close to those arising from economic models. We re-calibrate the climate part of the widely used DICE-2016: the multi-model mean as well as extreme, but still permissible climate sensitivities and carbon cycle responses. We…
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