An update from Nordhaus

New Estimates of Efficient Approaches to the Control of Global Warming

Date:  2009-08

By: William D. Nordhaus (Cowles Foundation, Yale University)
URL: http://d.repec.org/n?u=RePEc:cwl:cwldpp:1716&r=env

The present study extends earlier research by presenting the results of a new and updated version of the RICE model (Regional Integrated model of Climate and the Economy), labeled the RICE-2009 model. The model is a regionalized, dynamic model that incorporates an end-to-end treatment of economic growth, emissions, climate change, damages, and emissions controls. The model allows projections of what will occur with no policies, what an efficient set of policies would be, and how nations can undertake policies to limit climate change (in the current runs to 2 degrees C). These new estimates indicate that coordinated international policies have a substantial economic benefit. The optimal carbon tax is estimated to be $54 per ton carbon ($16 per ton CO_2) for 2010 in 2005 prices. The economic optimum would limit global temperature rise to an average of 2.1 degrees C over 1900 levels for the 22nd and 23rd century.

Keywords: Climate change economics, Environmental policy, Economic growth
JEL: Q54