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The Impacts and Costs of Climate Change

The Impacts and Costs of Climate Change
impacts by 50% after 10 years. Finally, for non-economic impacts in both regions there is no tolerable
temperature rise and adaptation can reduce them by 25%.
The model has been used to assess the total impacts, discounted back to a net present value, and the
marginal social cost of carbon under different stabilisation targets. The total damage values presented
are based on all global damages over a time horizon of 2200 and discounted back to a net present
value. The analysis for a business as usual run is based on the A2 scenario. The model has also
assessed 550 ppm and 450 ppm CO2 concentrations levels. These are broadly equivalent to 550 ppm
and 650 ppm CO2 equivalence (though PAGE includes stimulation of natural CO2 using IPCC
estimates of lower effective uptake of CO2 by oceans as the temperature increases, so the model
actually predicts higher increases). The PAGE model uses a range of parameters, including discount
rate and equity weighting. For these runs, the mean values are for a mean discount rate of 2% pure
rate of time preference (PRTP) and an elasticity of utility with respect to consumption of minus 1 (i.e.
an equity weighted scenario). The value of a 2% PRTP) is broadly consistent with the current EC
recommended discount rate of 4% social rate of time preference (assuming average GDP per capita
growth of 2%). Note the use of lower discount rates, or declining discount rate schemes would give
higher values than presented here.
Most impact assessment modelling studies present results in terms of the pure rate of time preference
(PRTP), as this is the fundamental parameter. The social rate of time preference is given by the pure
rate of time preference plus the per capita GDP growth rate multiplied by the negative of the elasticity
of utility with respect to consumption, which is a parameter used to determine the equity weights. This
also allows the use of different growth rates in different regions, an important aspect for non-OECD
analysis. When studies use a PRTP of 0%, they are still discounting but only to account for the extra
wealth that future generations will enjoy.
The results are shown below by scenario.
Baseline A2
Under this scenario, the mean CO2 concentration is about 815ppm by 2100 (1140ppm by 2150,
1450ppm by 2200). The figures below show concentration over time and the probability distribution
for 2100.
Figure 14. A2 Scenario (i) Carbon dioxide concentration over time and (ii) probability
distribution for 2100
Global CO2 concentrations, A2 scenario
1500000 -
1000000 - m+sd
- mean
500000 -m-sd
2000 2050 2100 2150 2200


AEA Technology Environment, August 2005


Watkiss, Paul; Downing, Tom; Handley, Claire & Butterfield, Ruth. The Impacts and Costs of Climate Change. Oxford, England. UNT Digital Library. Accessed January 22, 2017.