Appendix G

Damages Model-Specific Improvement Opportunities

In this appendix, the committee suggests model-specific improvements that could be undertaken if the IWG chooses to continue to use all or a subset of the current SC-IAM damage formulations. Based on our review and understanding of the current SC-IAM damage formulations, opportunities for updating each SC-IAM to satisfy the criteria in Recommendation 2-2 (in Chapter 2) have been identified. The committee’s goal is to highlight opportunities for the IWG to consider as alternatives in its decision process for implementing a near-term update. The committee views the existing models as providing material that is readily available, pieces of which can be used and updated and combined with other pieces, to create an improved damages module in the near term.

DICE

If in the near term the IWG decides to continue to use DICE as a source of damage formulations, the following adjustments are suggested:

• The quadratic damage formulations for sea level rise and other damages, including their treatment of adaptation, need to be further documented and justified.
• Regional and sectoral damage projection detail needs to be made available either through explicit modeling or a clearly documented calibration.

• The calibration of the individual noncatastrophic impact categories (e.g., agriculture, energy demand, coastal infrastructure, human health) need to be reevaluated in light of recent literature: for documentation, see Nordhaus and Boyer (2000) and Nordhaus (2007); also see discussion in Chapter 5, “Current Literature on Climate Damages.”
• Additional types of damages could be considered for inclusion (see Table 5-3 and the discussion in Chapter 5, “Updating Individual Sectoral Damage Functions”).
• If the calibration allows for meaningful characterization of parametric uncertainty, the damage functions need to be updated to include parametric uncertainty.
• The catastrophic damages calibration needs to be revisited and updated, if possible, and also revised to represent the stochastic nature of the “catastrophic” damages term.
• The IWG needs to avoid using a damage formulation whose calibration is based on meta-analysis of damage estimates from other SC-IAMs unless it is used by itself or the social cost of carbon estimation approach accounts for this between-model dependence.

FUND

If FUND continues as a source of damage formulations, the committee suggests the following adjustments:

• Further justification is needed for the damage formulations for agriculture, heating demand, cooling demand, and mortality, the assumptions underlying adaptation in the different sectors, the regional distribution of damages, and the parametric uncertainties overall.
• The calibration of the individual noncatastrophic impact categories in FUND (agriculture, energy demand, coastal infrastructure, human health), and their parametric uncertainty, need to be evaluated in light of recent literature and updated, as possible.
• Additional types of damages could be considered for inclusion (see Table 5-3 and the section “Updating Individual Sectoral Damage Functions” in Chapter 5).

PAGE

If PAGE is maintained as a source of damage formulations, the committee suggests the following adjustments:

• PAGE is the least well documented of the three SC-IAMs. Although the structure of the model is described in a number of publications and working papers, the committee was unable to find documentation providing scientific rationales for the parameter distributions used in the damage function. In addition, the code for the model is not publicly available. If the IWG wishes to continue with PAGE as one of the damage formulations going forward, clear documentation needs to be developed and the code needs to be made publicly available.
• The damage formulations, parametric uncertainties, and observed model behavior need further documentation and scientific justification. Particular focus needs to be given to noneconomic, economic, and discontinuity damages, regional distribution and scaling of damages, adaptation modeling and costs, and parametric uncertainties.
• The calibration of PAGE09 is based on damage estimates from other SC-IAMs. The IWG needs to avoid using a damage formulation whose calibration is based on damage estimates from other SC-IAMs unless it is used by itself or the SCC estimation approach accounts for this between-model dependence.

REFERENCES

Nordhaus, W.D., and Boyer, J. (2000). Warming the World: Economic Models of Global Warming. Cambridge, MA: MIT Press.

Nordhaus, W.D. (2007). Accompanying Notes and Documentation on Development of DICE-2007 Model: Notes on DICE-2007.delta.v8 as of September 21, 2007. New Haven, CT: Yale University Press. Available: http://www.econ.yale.edu/~nordhaus/homepage/Accom_Notes_100507.pdf [October 2016].

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