Workshop: Empirical and Methodological Advances in the Economic Analysis of Climate Change Policy

Title: Workshop: Empirical and Methodological Advances in the Economic Analysis of Climate Change Policy

Principal Investigator: Charles Kolstad

Dates: August 15, 2014 - December 14, 2015

Sponsor: U.S. Department of Energy

Abstract:

Objectives: The purpose of the proposed workshop is to identify and advance empirical and theoretical economic methods for analyzing climate change policy. The emphasis is on identifying (a) inadequacies in current methods and (b) identifying promising advances that are both significant and non-marginal. The ultimate goal is to advance the state-of-the-art of applied models and methods for analyzing climate policy.

Significance: A recent Forum in the Journal of Economic Literature (September 2013) focused on the question “How Should We Model Climate Change?” In that Forum, several articles suggested that the empirical underpinnings of current methods for analyzing climate policies are woefully inadequate. Even theory is inadequate for some dimensions of the climate change problem. Stern (2013) in particular suggests that the stable of integrated climate-economy (ICE) models (also known as integrated assessment models) are woefully inadequate and suggests developing a new generation of models integrating science, economics and impacts. Pindyck (2013) argues that the empirical basis of impacts in ICE models is extremely sparse and of little utility. The IPCC (Kolstad et al, 2014) has suggested that empirical understanding of the economics of impacts and mitigation is inadequate. Thus the time is ripe for examining promising frontiers and new directions in the economics of climate change. The timing is right with the IPCC scheduled to conclude its fifth assessment report in April 2014. Furthermore, this can have real significance to solving what is one of the globe’s most pressing environmental problems.

Approach: The approach of this proposal is to convene a small workshop of expert economists and others to review and present recent advances and promising new research directions in the economics of climate change, with a particular emphasis on research that can support analysis of climate policies (eg, through integrated assessment models). The goal is stimulate the dissemination and development of new economic methods for examining climate policy. The workshop will be held over two days early in 2015 at Stanford University, in the SEEPAC/SIEPR building. Research papers and presentations will be made available on the web.