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How sensitive is Nordhaus to Weitzman? Climate policy in DICE with an alternative damage function

Wouter Botzen and Jeroen van den Bergh

Economics Letters, 2012, vol. 117, issue 1, 372-374

Abstract: The damage function in the famous climate-economy model DICE has received much criticism. Weitzman (2010) has proposed an alternative approach that gives more serious attention to climate change impacts for larger temperature increases. We calculate optimal climate policy with DICE using this approach. Optimal emission abatement trajectories turn out to be very sensitive to the damage specification. We summarise the difference between the associated optimal abatement costs in NPV terms.

Keywords: Climate change; DICE model; Stern discounting (search for similar items in EconPapers)
JEL-codes: Q2 Q4 (search for similar items in EconPapers)
Date: 2012
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Handle: RePEc:eee:ecolet:v:117:y:2012:i:1:p:372-374