Role of Integrated Assessment Modelling IAM in climate change policy analysis

1
Role of Integrated Assessment Modelling (IAM) in
climate change policy analysis

• The Global Integrated Assessment Model (GIAM)
• An ABARE-CSIRO joint initiative
• Don Gunasekera and Melanie Ford

2
Outline

• Scene setting / background
• Modelling framework and assumptions
• Preliminary results
• Way forward

3
Climate change policy the Government's agenda

• Mitigation
• Emissions trading scheme
• Complementary programs (to ETS)
• Renewable energy targets
• Energy efficiency
• Adaptation
• International collaboration

4
Key climate change related issues

• Impacts of climate change
• By how much and at what speed should we reduce
  emissions?
• How should we balance the net costs/benefits of
  mitigation and adaptation against climate change
  impacts?
• Ability to refine/improve policy responses with
  improved information over time
• The international context

5
Features of current modelling frameworks

• Short term focus climate change impacts can be
  long term (to 2100 and beyond)
• Climate economy feedbacks are lacking
• Limited facility to incorporate climate change
  impacts
• Market impacts
• Non-market impacts
• Catastrophic impacts

6
Integrated Assessment Modelling an alternative
approach

• Integrates climate and economic models
• Multiple equation computer simulated modelling
  framework
• Allows feedbacks and interactions
• Gives a better indication of physical and
  economic impacts

7
Policy questions that IAMs can address

• Climate change damage costs
• Benefits of avoided climate change
• Net benefits of adaptation
• Net benefits of mitigation
• Optimal policy to balance mitigation, adaptation
  and damage costs
• Least cost way to achieve a given emission limit

8
Climate change policyA benefit cost analysis
(the fish diagram)
Global economic activity
Reference case without impacts
Mitigation scenario
benefits of policy
Reference case with impacts
costs of policy
Shaded area is climate change damages associated
with the reference case
time
9
Challenges in IAM

• Represent complex socio-economic, geophysical and
  climate systems and their interactions
• Uncertainties remain in climate change cause and
  effect chain
• Needs sensitivity analysis and model improvements
  as better information and improved parameter
  values become available

10
Global Integrated Assessment Model An
ABARE-CSIRO initiative

• Demand driven project sought by climate change
  negotiators and policy makers
• There are other IAMs available, but none
  represent Australia explicitly or appropriately
• Joint work began in October 2007
• Current GIAM version is preliminary and
  illustrative only
• Consists of an economic and a climate module
• Aim is to develop a proof of concept GIAM

11
Economic module of GIAM

• Long run version of GTEM
• Multi country, multi commodity and economy wide
  framework
• 9 regions
• 28 commodities
• 3 greenhouse gases
• Captures production, consumption and trade
  between and within countries

12
Climate module of GIAM

• Initial focus temperature changes only
• 5-Box carbon cycle model converts long run
  emissions from economic module to atmospheric
  concentrations
• CSIROs Mk3L General Circulation Model
• Estimates regional temperature changes using
  concentration levels

13
Converting temperature changes into economic
impacts

• Regional climate change related economic damages
  depend on
• regional change in temperature
• vulnerability to climate change impacts
• Uses a damage function to estimate economic
  impacts
• Based on MERGE model

14
Converting temperature changes into economic
impacts the damage function in GIAM

• Assumes
• damages ? gradually for small changes in
  temperature,
• damages ? more rapidly for larger changes in
  temperature
• Damages are implemented through losses in total
  factor productivity
• Loss in TFP depends on
• Change in temperature relative to reference year
• vulnerability to climate change developing
  countries are more vulnerable to climate change
  than developed countries
• Catastrophic change in temperature (relative to
  base year) at which economic activity falls to
  near zero

15
The functional form and parameterisation of the
damage function drives the results
16
Developing a reference case with impacts
17
Key drivers of emissions Global population
18
Key drivers of emissions economic growth
19
Key drivers of emissions Global primary energy
consumption
20
Global greenhouse gas emissions
21
Atmospheric concentration
22
Increase in average surface temperature, relative
to 2000 levels
23
Increase in average temperature, relative to
2000 levels
24
Economic growth pathway world
25
Economic growth pathway Australia
26
Way forward

• Need in-depth work on damage function
• Benefits in some regions at small temperature
  changes
• Rainfall and sea level changes
• Damages by key sector
• Multidisciplinary research into damages
• Social processes (demographic, urbanisation etc)
• Need to develop
• Adaptation module
• Policy response module
• Need more resources over several years

27
Thanks to

• CSIRO
• and
• The ABARE Climate Change and Modelling Section