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Coupling climate and economic models in a cost-benefit framework: a convex optimization approach

Drouet, L.; Edwards, N. R. and Haurie, A. (2006). Coupling climate and economic models in a cost-benefit framework: a convex optimization approach. Environmental Modeling and Assessment, 11(2) pp. 101–114.

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In this paper we present a general method, based on a convex optimisation technique, that facilitates the coupling of climate and economic models in a cost-benefit framework. As a demonstration of the method, we couple an economic growth model à la Ramsey adapted from DICE-99 with an efficient intermediate complexity climate model, C-GOLDSTEIN, which has highly simplified physics, but fully 3-D ocean dynamics. As in DICE-99 we assume that an economic cost is associated with global temperature change: this change is obtained from the climate model which is driven by the GHG concentrations computed from the economic growth path. The work extends a previous paper in which these models were coupled in cost-effectiveness mode. Here we consider the more intricate cost-benefit coupling in which the climate impact is not fixed a priori. We implement the coupled model using an oracle-based optimisation technique. Each model is contained in an oracle which supplies model output and information on its sensitivity to a master program. The algorithm Proximal-ACCPM guarantees the convergence of the procedure under sufficient convexity assumptions. Our results demonstrate the possibility of a consistent, cost-benefit, climate-damage optimisation analysis with a 3-D climate model.

Item Type: Journal Article
Copyright Holders: 2006 Springer
ISSN: 1573-2967
Project Funding Details:
Funded Project NameProject IDFunding Body
Not SetNot SetSNSF-NCCR Climate grant
Extra Information: The original publication is available at
Keywords: integrated assessment model; coupling; economy; climate; convex optimization; oracle
Academic Unit/Department: Science > Environment, Earth and Ecosystems
Interdisciplinary Research Centre: Centre for Earth, Planetary, Space and Astronomical Research (CEPSAR)
Item ID: 25677
Depositing User: Neil Edwards
Date Deposited: 04 Apr 2011 08:35
Last Modified: 07 Apr 2011 09:57
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