ASSESSING THE DICE MODEL: UNCERTAINTY ASSOCIATED WITH THE EMISSION AND RETENTION OF GREENHOUSE GASES

Analysis of the DICE model indicates that it contains unsupported assumptions, simple extrapolations, and misspecifications that cause it to understate the rate at which economic activity emits greenhouse gases and the rate at which the atmosphere retains greenhouse gases. The model assumes a world population that is 2 billion people lower than the base case' projected by demographers. The model extrapolates a decline in the quantity of greenhouse gases emitted per unit of economic activity that is possible only if there is a structural break in the economic and engineering factors that have determined this ratio over the last century. The model uses a single equation to simulate the rate at which greenhouse gases accumulate in the atmosphere. The forecast for the airborne fraction generated by this equation contradicts forecasts generated by models that represent the physical and chemical processes which determine the movement of carbon from the atmosphere to the ocean. When these unsupported assumptions, simple extrapolations, and misspecifications are remedied with simple fixes, the economic impact of global climate change increases several fold. Similarly, these remedies increase the impact of uncertainty on estimates for the economic impact of global climate change. Together, these results indicate that considerable scientific and economic research is needed before the threat of climate change can be dismissed with any degree of certainty.