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Recast The Dice And Its Policy Recommendations

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  • Rezai, Armon

Abstract

The DICE (for Dynamic Integrated model of Climate and the Economy) introduced two important policy aspects to the economic discussion of global warming. First, it argues for a “climate-policy ramp” that deems back-loading of mitigation optimal. Second, it demonstrates that an intergenerational tradeoff is at the heart of the mitigation problem. In this paper we argue that both of these findings rest on contestable assumptions. To demonstrate this a recast DICE is presented. Its outcomes show that DICE's predictions are not robust with higher migitations earlier on and slower temperature increases along the optimal path. The adoption of a baseline scenario in which pollution is a negative externality makes mitigating climate change a Pareto improvement. The alleged sacrifice of present generations vanishes. This strengthens the case for immediate policy action.

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  • Rezai, Armon, 2010. "Recast The Dice And Its Policy Recommendations," Macroeconomic Dynamics, Cambridge University Press, vol. 14(S2), pages 275-289, November.
    • Handle: RePEc:cup:macdyn:v:14:y:2010:i:s2:p:275-289_00
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    Citations

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    Cited by:

    1. Sarah Wolf & Franziska Schütze & Carlo C. Jaeger, 2016. "Balance or Synergies between Environment and Economy—A Note on Model Structures," Sustainability, MDPI, vol. 8(8), pages 1-11, August.
    2. Armon Rezai & Frederick van der Ploeg & Cees Withagen, 2012. "The Optimal Carbon Tax and Economic Growth: Additive versus Multiplicative Damages," CEEES Paper Series CE3S-05/12, European University at St. Petersburg, Department of Economics.
    3. Karp, Larry & Rezai, Armon, 2017. "Asset prices and climate policy," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6fx579fp, Department of Agricultural & Resource Economics, UC Berkeley.
    4. Andersen, Torben M. & Bhattacharya, Joydeep & Liu, Pan, 2020. "Resolving intergenerational conflict over the environment under the Pareto criterion," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    5. Armon Rezai & Frederick van der Ploeg & Cees Withagen, 2020. "Economic growth and the social cost of carbon: additive versus multiplicative damages," Chapters, in: Graciela Chichilnisky & Armon Rezai (ed.), Handbook on the Economics of Climate Change, chapter 9, pages 199-223, Edward Elgar Publishing.
    6. Armon Rezai & Duncan K. Foley & Lance Taylor, 2016. "Global Warming and Economic Externalities," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 447-470, Springer.
    7. Andersen, Torben M. & Bhattacharya, Joydeep & Liu, Pan, 2018. "A way to resolve intergenerational conflict over the environment under the Pareto criterion using green bonds," ISU General Staff Papers 201808240700001070, Iowa State University, Department of Economics.
    8. Armon Rezai, 2011. "The Opportunity Cost of Climate Policy: A Question of Reference," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(4), pages 885-903, December.
    9. Heiko Wirths & Joachim Rathmann & Peter Michaelis, 2018. "The permafrost carbon feedback in DICE-2013R modeling and empirical results," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(1), pages 109-124, January.

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