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2016 | OriginalPaper | Buchkapitel

7. Understanding and Evaluating the IAM-Based Economics

verfasst von : Martin Kowarsch

Erschienen in: A Pragmatist Orientation for the Social Sciences in Climate Policy

Verlag: Springer International Publishing

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Abstract

Deepening the problem analysis of the previous parts, Part III analyses both the Working Group (WG) III contribution to the Assessment Reports (ARs) of the Intergovernmental Panel on Climate Change (IPCC) (in Chap. 10) and the underlying economics of climate change (in this chapter, 8 and 9). This chapter will introduce: (1) the economics of climate change (Sect. 7.1), while pointing out the diversity of possible problem framings (and methods) in the economics of climate change; (2) the integrated assessment models (IAMs) as its main methodical tools in the IPCC WG III AR4 and AR5 (Sect. 7.2); and (3) three evaluation criteria for the critical reflection on the IAM-based literature (Sect. 7.3), including a framework for identifying normative assumptions in economics to make them more transparent. The evaluation criteria will mainly build on the refined pragmatic model of scientific expertise in policy from Chap. 6, as the tentative ends-in-view for Part III. (4) Finally, the policy-relevance of the IAM-based literature will be briefly discussed (Sect. 7.4). IAMs can contribute a lot to the important topic of the costs, risks and benefits of global mitigation goals.

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Vorheriges Kapitel Pragmatism: Objectivity Despite Fact/Value Entanglement
Nächstes Kapitel Ethics in Climate Economics: Balance or Bias?
Fußnoten
1
See also Nature (2013), arguing that “attention will turn to the second and third groups, which focus on impacts and mitigation.” A rough media analysis undertaken by the WG III AR5 Technical Support Unit revealed a relatively high coverage of WG III issues in the mass media this time (source: personal conversation with WG III Technical Support Unit).
 
2
The evaluation of IAM economics undertaken herein will, however, not only be preparatory work for the evaluation (Chap. 10) and improvement (Chap. 11) of IPCC assessments, but also for the evaluation and improvement of the work of the IAM-community itself for which the IPCC could at least provide some incentives (see Sect. 11.​5).
 
3
The most successful introductory textbook on economics was written by Samuelson and Nordhaus (e.g., the 19th edition Samuelson and Nordhaus 2010).
 
4
This led to a split into physical-level approaches (focus on “objective” human labour) and subjective-level (focus on “subjective” marginal utility) approaches (Giersch 1993, p. 17).
 
5
Scarcity can be understood as “the finiteness of the space of consequences; that is to say, the actions homo economicus can choose do not exhaust all conceivable experiences in the world” (Rodriguez-Sickert 2009, p. 224).
 
6
See also Caldwell (1994, Chap. 6). Robbins (1945, p. 16) defines economics as follows: “Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” This was very influential for economics (Dutt and Wilber 2010, p. 235). It slightly reminds one about the decisionist science-policy model.
 
7
The core ideas of neoclassical economics are explained in most introductory textbooks to (history of) economics. See also Sect. 8.​1.​2 below.
 
8
As do Nordhaus and Boyer (2000, p. 3), for instance.
 
9
But, ambitious climate change mitigation cannot wait until the combustion of fossil resources stops because so much fossil fuels are still in the ground (IPCC 2014). Although there are still uncertainties, there are already – in principle – sufficient technological possibilities for a drastic reduction of GHG emissions and for creating energy security (IPCC 2007, 2014).
 
10
This view has been held by, e.g., large parts of the American public in recent years (Pooley 2010, pp. x and 6).
 
11
A good example of the possible impact of a particular problem framing is the Stern Review (Stern 2007). Stern argued that in the case of unabated emissions of GHGs in the twenty-first century, climate change impacts will cause considerable economic costs that exceed the global costs of ambitious climate change mitigation by a factor of roughly ten. This problem framing had a significant political impact (see Sect. 3.​1.​3 and Edenhofer 2006); it pointed out that there is no simple trade-off between economic development and climate change mitigation (as also argued, e.g., in Edenhofer et al. 2012). Moreover, Stern’s report made clear that climate policy is largely a moral problem, particularly in terms of intergenerational justice.
 
12
See, e.g., Siegmeier et al. (2015). Detailed introductions to the economics of climate change mitigation can be found in Nordhaus (2008; 2013a), Stern (2007; 2008), Edenhofer et al. (2012; 2013), Touffut (2009), and Heal (2009), for instance.
 
13
A more recent, great introduction to climate-related IAMs and their history is provided by Nordhaus (2013b). See also Weyant (2009) as well as Füssel and Mastrandrea (2009) for the historical and future development of IAMs.
 
14
See also Shackley and Wynne (1995); IPCC (2007, Chap. 3); Füssel and Mastrandrea (2009).
 
15
E.g. the scientific community dealing with impacts, adaptation and vulnerability.
 
16
It would be more precise, but too laborious, to talk about IAM families herein.
 
17
A helpful systematic overview of different types of models can be found in Edenhofer et al. (2006b) who take into account only those models that “incorporate technological change in innovative ways and allow an assessment of costs of global carbon dioxide mitigation.” This limitation, however, is not a severe restriction; both of the aspects are crucial for answering crucial questions of climate policy. It should always be kept in mind that there are many other kinds of IAMs not discussed in the present volume. Further publications providing an IAM overview include, e.g., IPCC (1996, Chap. 10); IPCC (2007, Sect. 3.6.2 and Chap. 11); Hope (2005); Kelly and Kolstad (1998); Parson and Fisher-Vanden (1997); and Füssel and Mastrandrea (2009).
 
18
These models can be cost-benefit models or target-based models on the one hand, or uncertainty-based models on the other hand, according to Hope (2005, p. 82).
 
19
See Edenhofer et al. (2006b), also for an explanation of “endogenous” versus “induced” technological change.
 
20
See http://​emf.​stanford.​edu/​, accessed 30 Mar 2015.
 
21
Stern (2007). Citations in IPCC (2007): Chap. 3 (pp. 206, 226, 232, 233) and Chap. 11 (pp. 649, 651, 657, 659).
 
22
Citations in IPCC (2007): Chap. 3 (pp. 197, 201, 205, 223, 224, 238) and Chap. 11 (pp. 636, 648, 651, 653, 654, 656–659, 661).
 
23
PAGE2002 is explained in detail by Hope (2006) and partly by the Stern Review (2007).
 
24
MIND is described in detail by Edenhofer et al. (2005) and 2006a, and has since been developed into ReMIND-R and other variants (Leimbach et al. 2010).
 
25
A further, already mentioned limitation of Part III is that the economic models and scenarios as well as the IPCC assessment sections analysed herein have mainly to do with issues related to long-term global climate change mitigation. Moreover, understanding the reasons why IAM-based literature in some cases does not fulfil these selected evaluation criteria is yet another question. Although it will be addressed to some extent in the following chapters and in Sect. 11.​5, it is not the key focus of the present volume.
 
26
See Betz (2006); Dutt and Wilber (2010); Hausman and McPherson (2006); and the extensive debate after the Stern Review explained below.
 
27
According to Beckerman (2011, p. 3), many philosophers in the past mainly criticised economic assumptions, rather than constructively contributing to economic theory.
 
28
To avoid a misunderstanding sometimes occurring in economic texts, ethically reflecting on actions does not mean to simply introduce an additional and competitive aspect beside economic or other reasons when assessing a situation, but rather, it means to weigh all of the economic, socio-cultural, environmental and further aspects.
 
29
See Krijnen (2011). In contrast, Weber’s influential definition focuses on satisfaction: “By ‘VALUE JUDGMENTS’ are to be understood […] practical evaluations of the unsatisfactory or satisfactory character of phenomena subject to our influence” (Weber 1949, p. 1).
 
30
See also the German “Werturteilsstreit,” i.e., the controversies about values in sociology and other social sciences in the twentieth century, in order to better understand the importance and complexity of this issue.
 
31
In Biewald et al. (2015), a similar account – in terms of three different types of normative-ethical assumptions in economic models – was already presented, yet in a highly condensed form. The following sections refine, elaborate on and partly underpin the brief statements made by Biewald et al. (2015).
 
32
An ethical value judgement is ‘implied’ when an economic statement or model assumption cannot be fully understood without such a normative assumption. There is, however, always space for interpretation.
 
33
Section 8.4.5 will furthermore discuss ethical gaps as another cross-cutting type of ethical assumptions in IAM-based economic research.
 
34
Such “costs” can be defined very differently: “In general, four different types of mitigation costs can be distinguished […]: direct engineering costs, economic costs for a specific sector, macroeconomic costs and welfare costs” (Edenhofer et al. 2010, p. 29). See also IPCC (2007, Sect. 2.4 and pp. 203ff) and Edenhofer et al. (2006b, Sect. 3). The WG III AR5 provides an explanation of the term ‘mitigation cost’ (IPCC 2014, Box TS.9). E.g., the regional economic costs of ambitious mitigation targets – under the assumption of a global carbon market – would consist of at least three elements: (1) the devaluation of fossil resources in the region, (2) the costs of transforming the regional energy system and (3) the allocation of emissions rights insofar as the region would have to buy emissions permits (Knopf et al. 2012). However, currently hardly anybody believes in a global emission trading system given the political reservations.
 
35
See IPCC (2007, pp. ix, 12, 18, Sect. 2.4, 203–214, and Chap. 11).
 
36
I mainly learned about such research gaps in a conversation with Dr. Gunnar Luderer, a distinguished expert on, and practitioner of, IAM modelling.
 
37
A highly interesting study that discusses both under-researched second-best world aspects and their potential integration into IAMs is provided by Staub-Kaminski et al. (2014). Another major research gap related to IAMs is the possible climate change impacts and damages. The uncertainty is still so high that most IAMs follow the cost-effectiveness approach.
 
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Metadaten
Titel
Understanding and Evaluating the IAM-Based Economics
verfasst von
Martin Kowarsch
Copyright-Jahr
2016
Buch
A Pragmatist Orientation for the Social Sciences in Climate Policy

Print ISBN: 978-3-319-43279-3

Electronic ISBN: 978-3-319-43281-6

Copyright-Jahr: 2016

DOI
https://doi.org/10.1007/978-3-319-43281-6_7