Recent developments in economic Integrated Assessment Modelling
Prof. Armon Rezai is associate professor in environmental economics at the Vienna University of Economics and Business (WU), researcher at the International Institute for Applied Systems Analysis (IIASA), and an external research affiliate at the Oxford Centre for the Analysis of Resource Rich Economies (Oxcarre) of Oxford University. He has published widely on macroeconomic topics, such as growth and distribution, and their application to environmental problems like climate change in economic journals as well as the popular press. Before joining his current department, he earned a doctorate in economics from The New School for Social Research and worked at the United Nations University's World Institute for Development Economics Research in Helsinki.
Integrated assessment models (IAMs) for estimation of the costs and benefits of climate policy play an instrumental role in shaping climate action but are highly complex and rarely open access. This makes it hard to assess their policy recommendations and on what assumptions these depend on. While particular IAMs have been subject to intense scrutiny and debate, we present a simple framework that captures the essence of IAMs and makes their underlying assumptions transparent. First, we give a simple rule for the global price of carbon in terms of world GDP, key ethical considerations, and geophysical parameters. Second, we contrast economic with geo-physical assumptions driving estimations of the social cost of carbon in prominent IAMs.