Something that the authors of this book perhaps should have highlighted is that DICE’s main virtue is its simplicity: it is far from being either the only or the best IAM for most analyses. However, to appreciate how badly calibrated the damage function is, here’s a note from the documentation:
“However, current studies generally omit several important factors (the economic value of losses from biodiversity, ocean acidification, and political reactions), extreme events (sea-level rise, changes in ocean circulation, and accelerated climate change), impacts that are inherently difficult to model (catastrophic events and very long term warming), and uncertainty (of virtually all components from economic growth to damages). I [Nordhaus] have added an adjustment of 25 percent of the monetized damages to reflect these non-monetized impacts. ”
Something that the authors of this book perhaps should have highlighted is that DICE’s main virtue is its simplicity: it is far from being either the only or the best IAM for most analyses. However, to appreciate how badly calibrated the damage function is, here’s a note from the documentation:
“However, current studies generally omit several important factors (the economic value of losses from biodiversity, ocean acidification, and political reactions), extreme events (sea-level rise, changes in ocean circulation, and accelerated climate change), impacts that are inherently difficult to model (catastrophic events and very long term warming), and uncertainty (of virtually all components from economic growth to damages). I [Nordhaus] have added an adjustment of 25 percent of the monetized damages to reflect these non-monetized impacts. ”
(Quote is from the manual of DICE 2013R, http://www.econ.yale.edu/~nordhaus/homepage/homepage/documents/DICE_Manual_100413r1.pdf , still valid for 2016R version as per https://www.pnas.org/content/114/7/1518/tab-figures-data .)