Project 2: Climate-economy modelling
An essential part of Mistra-SWECIA is to better understand the feedbacks between the human economic system and the natural climate system over long periods of time. To do that requires models of the two-way interaction between these two global systems. It is important to account for regional disparities, both on the economic side and the climate side. Because people in different regions live under different social and economic conditions, even the same amount of global climate change would affect different regions in a different way. Moreover, regional climates will change in different ways from the global mean.The research in Project 2 will build a new generation of such climate-economy models on the foundation of modern macroeconomics. These will be used to answer questions like the following:
- How do different regional consequences of global climate change and their interaction with different regional economic developments shape the mutual feedbacks between global economic development and climate change?
- How do regional distributions of future temperature, precipitation, and wind-speed — including extreme events as heat-waves, droughts and severe storms — affect capital stocks, production and human welfare, and how do changes in these distributions following global climate change affect regional investment patterns?
- How large is the uncertainty about future economic and climate outcomes at the regional level, given uncertainties about future developments of population, technical change, global-to-regional climate patterns, properties of the carbon cycle, sensitivity of climate to greenhouse gases, and damages caused by changing climate?
- How much may different forms of adaptation, through global or regional market mechanisms — including international trade, credit, insurance, and migration — help reduce future costs of climate change?
- How fast will different regions manage to improve the energy efficiency of their production process?
- How does this form of "endogenous and directed" technical change depend on anticipated future climate change and energy prices, as well as the uncertainty about those developments?
- To what extent can global or regional energy-saving or emission-reducing technical change be stimulated by policies (e.g., taxes or cap-and-trade), technical standards, or programs that facilitate international transfer of new technologies?
>>Economy models in use in Project 2
