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Decomposing Integrated Assessment Climate Change

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  • Böhringer, Christoph
  • Löschel, Andreas
  • Rutherford, Thomas F.

Abstract

We present a decomposition approach for integrated assessment modeling of climate policy based on a linear approximation of the climate system. Our objective is to demonstrate the usefulness of decomposition for integrated assessment models posed in a complementarity format. First, the complementarity formulation cum decomposition permits a precise representation of post-terminal damages thereby substantially reducing the model horizon required to produce an accurate approximation of the infinite-horizon equilibrium. Second, and central to the economic assessment of climate policies, the complementarity approach provides a means of incorporating second-best effects that are not easily represented in an optimization model.

Suggested Citation

  • Böhringer, Christoph & Löschel, Andreas & Rutherford, Thomas F., 2005. "Decomposing Integrated Assessment Climate Change," ZEW Discussion Papers 05-07, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:4540
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Olga Kiuila & Thomas F. Rutherford, 2014. "Economic modeling approaches: optimization versus equilibrium," Working Papers 2014-04, Faculty of Economic Sciences, University of Warsaw.
    2. Michael Finus & Bianca Rundshagen & Johan Eyckmans, 2014. "Simulating a sequential coalition formation process for the climate change problem: first come, but second served?," Annals of Operations Research, Springer, vol. 220(1), pages 5-23, September.
    3. Honkatukia, Juha & Forsström, Juha, 2009. "The Costs of the EU Energy Package for Finland - a Model-Based Assessment," Conference papers 331824, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Simon Dietz & Bruno Lanz, 2019. "Growth and Adaptation to Climate Change in the Long Run," CESifo Working Paper Series 7986, CESifo.
    5. Schenker, Oliver & Bucher, Raphael, 2010. "On interactions of optimal climate policy and international trade. An assessment of border carbon measures," MPRA Paper 25820, University Library of Munich, Germany.
    6. Loisel, Rodica, 2009. "Environmental climate instruments in Romania: A comparative approach using dynamic CGE modelling," Energy Policy, Elsevier, vol. 37(6), pages 2190-2204, June.
    7. Theodoridou, Ifigeneia & Papadopoulos, Agis M. & Hegger, Manfred, 2012. "A feasibility evaluation tool for sustainable cities – A case study for Greece," Energy Policy, Elsevier, vol. 44(C), pages 207-216.
    8. Rodica Loisel, 2009. "Environmental climate instruments in Romania: A comparative approach using dynamic CGE modelling," Post-Print halshs-00441491, HAL.

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    More about this item

    Keywords

    integrated assessment; decomposition; terminal constraints; optimal taxation;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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