Pareto-improving climate policies

Future generations will be richer than us, but may have a more inferior environment. While mitigation today will increase the quality of the future environment, it implies costs to the current generation. However, by transferring resources from the future to the present generation there may be possibilities for improving the welfare of all generations. This can be done by compensating mitigation today by fewer investments so that the present generation does not have to reduce consumption.

This is a numerical project where we do simulations with the RICE model. The project started in 2013 and was finalized by a working paper in 2015, which has been submitted to Journal of Environmental Economics and Management. It has been presented at several conferences, seminars and workshops.

In 2016, we extend this project by studying the implications for the energy systems by using the Global Change Assessment Model (GCAM). GCAM input assumptions are population, economic activity (GDP), technology characterization, and policy. We begin by tuning the GCAM reference scenario to match the RICE-derived reference scenario. That means using RICE population and economic growth in GCAM. Since the RICE model does not prescribe technology assumptions, we begin with the default assumptions in GCAM. We use the rate of exogenous end-use energy intensity improvement to tune GCAM emissions to match the emissions pathway produced by the reference scenario by RICE.