DICE model

According to a summary of the DICE and RICE models prepared by Stephen Newbold, the earliest precursor to DICE was a linear programming model of energy supply and demand in two 1977 papers of William Nordhaus.{{cite web|url = http://cowles.econ.yale.edu/P/cm/m26/m26-08.pdf|title = Strategies for the control of carbon dioxide (Cowles Foundation discussion paper no. 443|last = Nordhaus|first = William|author-link = William Nordhaus|year = 1977|access-date = February 19, 2014}}{{cite journal|url = http://www.econ.yale.edu/~nordhaus/homepage/carbondixoideproblem.pdf|title = Economic Growth and Climate: The Carbon Dioxide Problem|last = Nordhaus|first = Wiliam|author-link = William Nordhaus|date = February 1977|access-date = February 19, 2014|pages = 341–346|publisher = American Economic Review|volume = 67|issue = 1|archive-url = https://web.archive.org/web/20131106002844/http://www.econ.yale.edu/~nordhaus/homepage/carbondixoideproblem.pdf|archive-date = November 6, 2013|url-status = dead}} Although dynamic (in that it considered the changing levels of supply of fuel based on supply and demand and the consequence impact on carbon dioxide emissions) the model did not attempt to measure the economic impact of climate change. A 1991 paper by Nordhaus developed a steady-state model of both the economy and climate, coming quite close to the DICE model.{{cite journal|title = To Slow or Not to Slow: The Economics of the Greenhouse Effect.|last = Nordhaus|first = William|author-link = William Nordhaus|journal = The Economic Journal|volume = 101|number = 407|date = July 1991|doi=10.2307/2233864|pages=920–937|jstor = 2233864}}

The model appears to have first been proposed by economist William Nordhaus in a discussion paper for the Cowles Foundation in February 1992.{{cite web|url=http://cowles.econ.yale.edu/P/cd/d10a/d1009.pdf|title = The "Dice" Model: Background and Structure of a Dynamic Integrated Climate-Economy Model of the Economics of Global Warming (Cowles Foundation discussion paper no. 1009)|last = Nordhaus|first = William|author-link = William Nordhaus|date = February 1992|access-date = February 19, 2014}} He also wrote a brief note outlining the main ideas in an article for Science in November 1992.{{cite journal|title = An Optimal Transition Path for Controlling Greenhouse Gases|url = http://www.econ.yale.edu/%7Enordhaus/homepage/Optimal.science.1192.pdf|last = Nordhaus|first = William|author-link = William Nordhaus|journal = Science|volume = 258|issue = 5086|date = November 20, 1992|access-date = February 19, 2014|doi = 10.1126/science.258.5086.1315|pmid = 17778354|pages = 1315–1319|bibcode = 1992Sci...258.1315N|s2cid = 23232493|archive-url = https://web.archive.org/web/20151116115904/http://www.econ.yale.edu/%7Enordhaus/homepage/Optimal.science.1192.pdf|archive-date = November 16, 2015|url-status = dead}} A subsequent revised model was published in Resource and Energy Economics in 1993.{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/dice_section_II.html|title = Original DICE and RICE models|access-date = February 19, 2014|last = Nordhaus|first = William|author-link = William Nordhaus|archive-url = https://web.archive.org/web/20141008180217/http://www.econ.yale.edu/%7Enordhaus/homepage/dice_section_II.html|archive-date = October 8, 2014|url-status = dead}}{{cite journal|title = Rolling the 'DICE': An Optimal Transition Path for Controlling Greenhouse Gases|last = Nordhaus|first = William|author-link = William Nordhaus|volume = 15|pages = 27–50|year = 1993|journal = Resource and Energy Economics|doi = 10.1016/0928-7655(93)90017-O|url = http://cowles.yale.edu/sites/default/files/files/pub/d10/d1019.pdf}}

Nordhaus published an improved version of the model in the October 1994 book Managing the Global Commons: The Economics of Climate Change,{{cite book|title = Managing the Global Commons: The Economics of Climate Change|last = Nordhaus|first = William|author-link = William Nordhaus|date = October 4, 1994|publisher = MIT Press}} with the first chapter as well as an appendix containing a computer program both freely available online.{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/manageapp.htm|title = Appendix. Computer Program for DICE model|date = October 4, 1994|access-date = February 19, 2014|last = Nordhaus|first = William|author-link = William Nordhaus|archive-url = https://web.archive.org/web/20150628033603/http://www.econ.yale.edu/%7Enordhaus/homepage/manageapp.htm|archive-date = June 28, 2015|url-status = dead}}{{Cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/managec1.htm|title = Chapter 1 (Managing the Global Commons|last = Nordhaus|first = William|author-link = William Nordhaus|access-date = February 19, 2014|archive-url = https://web.archive.org/web/20150627141810/http://www.econ.yale.edu/~nordhaus/homepage/managec1.htm|archive-date = June 27, 2015|url-status = dead}} Marian Radetzki reviewed the book for The Energy Journal.{{cite journal|title = Managing the Global Commons: The Economics of Climate Change|last = Radetzki|first = Marian|journal = The Energy Journal|volume = 16|pages = 132–135|number = 2|year = 1995|jstor=41323453}}

In 1996, Nordhaus and Zili Yang published an article titled A regional dynamic general-equilibrium model of alternative climate-change strategies at The American Economic Review, established the RICE (Regional Integrated model of Climate and the Economy) model.WD Nordhaus, Z Yang - A regional dynamic general-equilibrium model of alternative climate-change strategies The American Economic Review, 1996

In 1998, Nordhaus published a revised version of the DICE model in multiple papers, one of which was coauthored with Joseph Boyer in order to understand the effects of the proposed Kyoto Protocol.{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/dice_section_III.html|title = III. Research Papers Using revised DICE and RICE Models|last = Nordhaus|first = William|author-link = William Nordhaus|access-date = February 19, 2014|archive-url = https://web.archive.org/web/20141008180222/http://www.econ.yale.edu/%7Enordhaus/homepage/dice_section_III.html|archive-date = October 8, 2014|url-status = dead}}{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/Kyoto.pdf|title = Requiem for Kyoto: An Economic Analysis of the Kyoto Protocol|last1 = Nordhaus|first1 = William|author-link = William Nordhaus|last2 = Boyer|first2 = Joseph|author-link2 = Joseph Boyer|date = February 8, 1999|access-date = February 19, 2014|archive-url = https://web.archive.org/web/20001006234806/http://www.econ.yale.edu/~nordhaus/homepage/Kyoto.pdf|archive-date = October 6, 2000|url-status = dead}}

In 1999, Nordhaus published computer programs and spreadsheets implementing a revised version of the DICE model as well as a variant called the RICE model (RICE stands for Regional Integrated Climate-Economics, signifying that the modeling of economics and climate are being done only for a particular region rather than the whole world).{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/dice_section_IV.html|title = GAMS Computer Programs for RICE-99|last = Nordhaus|first = William|access-date = February 19, 2014|archive-url = https://web.archive.org/web/20141008180227/http://www.econ.yale.edu/%7Enordhaus/homepage/dice_section_IV.html|archive-date = October 8, 2014|url-status = dead}}{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/dice_section_V.html|last = Nordhaus|first = William|author-link = William Nordhaus|title = Spreadsheet Versions of DICE-99 and RICE-99 models|access-date = February 19, 2014|archive-url = https://web.archive.org/web/20141008180232/http://www.econ.yale.edu/%7Enordhaus/homepage/dice_section_V.html|archive-date = October 8, 2014|url-status = dead}}

In 2000, Nordhaus and Boyer co-authored a book published by MIT Press titled Warming the World: Economic Models of Global Warming with a detailed description of the updated DICE and RICE models.{{cite book|url = http://www.econ.yale.edu/~nordhaus/homepage/web%20table%20of%20contents%20102599.htm|title = Warming the World: Economic Models of Global Warming (hardcover)|last1 = Nordhaus|first1 = William|last2 = Boyer|first2 = Joseph|date = August 21, 2000|access-date = February 19, 2014|publisher = MIT Press|archive-url = https://web.archive.org/web/20150916185541/http://www.econ.yale.edu/~nordhaus/homepage/web%20table%20of%20contents%20102599.htm|archive-date = September 16, 2015|url-status = dead}}

In 2001, Nordhaus published revised spreadsheets for the RICE model.{{cite web|url=http://www.econ.yale.edu/~nordhaus/homepage/dice_section_vi.html|title = Spreadsheet Version of RICE-2001 Model Used for Science Article|access-date = February 19, 2014|last = Nordhaus|first = William|author-link = William Nordhaus}}

In November 2006, Nordhaus published a new version of the DICE model with updated data, and used it to review the Stern Review.{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/D_111606_alt_base.GMS|title = DICE model recalibrated to data for November 2006|date = November 16, 2006|access-date = February 19, 2014|last = Nordhaus|first = William|author-link = William Nordhaus|archive-url = https://web.archive.org/web/20141008180207/http://www.econ.yale.edu/~nordhaus/homepage/D_111606_alt_base.GMS|archive-date = October 8, 2014|url-status = dead}}{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/DICE_documentation_111706.pdf|title = Documentation for DICE-2006, November 2006 round|last = Nordhaus|first = William|author-link = William Nordhaus|date = November 17, 2006|access-date = February 19, 2014|archive-url = https://web.archive.org/web/20141014141710/http://www.econ.yale.edu/~nordhaus/homepage/DICE_documentation_111706.pdf|archive-date = October 14, 2014|url-status = dead}}

In 2010, updated RICE and DICE models were published, and the new RICE model was explained by Nordhaus in an article for the Proceedings of the National Academy of Sciences (US).{{cite journal|title = Economic aspects of global warming in a post-Copenhagen environment|last = Nordhaus|first = William|author-link = William Nordhaus|date = May 10, 2010|doi = 10.1073/pnas.1005985107|journal = Proceedings of the National Academy of Sciences|volume = 107|issue = 26|pages = 11721–11726|pmid = 20547856|pmc = 2900661|bibcode = 2010PNAS..10711721N|doi-access = free}}{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/RICEmodels.htm|title = RICE-2010 and DICE-2010 Models (as of March 20, 2012)|last = Nordhaus|first = William|date = March 20, 2012|access-date = February 19, 2014|author-link = William Nordhaus|archive-url = https://web.archive.org/web/20141019003749/http://www.econ.yale.edu/~nordhaus/homepage/RICEmodels.htm|archive-date = October 19, 2014|url-status = dead}}

In 2013, the book The Climate Casino by Nordhaus, with updated discussion of the DICE and RICE models and the broader policy implications, was published by Yale University Press.{{cite book|title = The Climate Casino: Risk, Uncertainty, and Economics for a Warming World|last = Nordhaus|first = William|author-link = William Nordhaus|date = October 22, 2013|publisher = Yale University Press|isbn = 978-0300189773}} A background on the latest version of the models as used in the book was published on Nordhaus' website.{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/ClimateCasino.htm|title = Background on the DICE Models For Readers of The Climate Casino (2013)|last = Nordhaus|first = William|author-link = William Nordhaus|access-date = February 19, 2014|archive-url = https://web.archive.org/web/20140225120909/http://www.econ.yale.edu/~nordhaus/homepage/ClimateCasino.htm|archive-date = February 25, 2014|url-status = dead}}{{cite web|url = http://www.econ.yale.edu/~nordhaus/homepage/DICE-science.htm|title = Scientific and Economic Background on DICE-2013R Model as of January 22, 2014|last = Nordhaus|first = William|date = January 22, 2014|access-date = February 19, 2014|author-link = William Nordhaus|archive-url = https://web.archive.org/web/20140225122008/http://www.econ.yale.edu/~nordhaus/homepage/DICE-science.htm|archive-date = February 25, 2014|url-status = dead}}

In 2020, modelers from the Potsdam Institute for Climate Impact Research (PIK) reported a rerun of the DICE model using updated climate and economic information and found that the economically optimal climate goal was now less than {{val|2.0|ul=degC}} of global warming {{mdash}} and not the {{val|3.5|u=degC}} that Nordhaus had originally calculated.

{{cite press release

| author = PIK

| title = An economic case for the UN climate targets: early and strong climate action pays off

| date = 13 July 2020

| publisher = Potsdam Institute for Climate Impact Research

| location = Potsdam, Germany

| url = https://www.pik-potsdam.de/news/press-releases/an-economic-case-for-the-un-climate-targets-early-and-strong-climate-action-pays-off

| access-date = 2020-10-08

}} German language version available also.

{{cite journal

| last1 = Hänsel | first1 = Martin C

| last2 = Drupp | first2 = Moritz A

| last3 = Johansson | first3 = Daniel J A

| last4 = Nesje | first4 = Frikk

| last5 = Azar | first5 = Christian

| last6 = Freeman | first6 = Mark C

| last7 = Groom | first7 = Ben

| last8 = Sterner | first8 = Thomas

| title = Climate economics support for the UN climate targets

| date = 13 July 2020

| journal = Nature Climate Change

| volume = 10

| issue = 8

| pages = 781–789

| doi = 10.1038/s41558-020-0833-x

| bibcode = 2020NatCC..10..781H

| issn = 1758-6798

| doi-access = free

}} {{closed access}}

The PIK team employed current understandings of the climate system and more modern social discount rates.

{{cite journal

| last1 = Drupp | first1 = Moritz A

| last2 = Freeman | first2 = Mark C

| last3 = Groom | first3 = Ben

| last4 = Nesje | first4 = Frikk

| title = Discounting disentangled

| date = 1 November 2018

| journal = American Economic Journal: Economic Policy

| volume = 10

| issue = 4

| pages = 109–134

| doi = 10.1257/pol.20160240

| issn = 1945-7731

| url = http://eprints.lse.ac.uk/87375/1/Groom__discounting-disentangled--author.pdf

}}

This new result therefore broadly supports the Paris Agreement goal of holding global warming to "well below {{val|2.0|u=degC}}".

Their revised AMPL code and data are available under open licenses.

{{cite book

| last1 = Hänsel | first1 = Martin C

| title = Data and code for "Climate economics support for the UN climate targets

| date = 13 May 2020

| publisher = Inter-university Consortium for Political and Social Research

| location = Ann Arbor, Michigan, USA

| doi = 10.3886/E119395V1

| url = https://www.openicpsr.org/openicpsr/project/119395/version/V1/view/

| access-date = 2020-10-08

}} AMPL code. Licensed CC‑BY‑4.0.

According to the original formulation of DICE, staying below the 2 °C as agreed by the Paris agreement would cost more in mitigation investments than would be saved in damage from climate change. A 2020 paper by Glanemann, Willner and Levermann, which used an updated damage function, revised this conclusion, showing that a warming of around 2 °C would be "optimal", depending on the climate sensitivity to greenhouse gases.{{Cite journal|last1=Glanemann|first1=Nicole|last2=Willner|first2=Sven N.|last3=Levermann|first3=Anders|date=2020-01-27|title=Paris Climate Agreement passes the cost-benefit test|journal=Nature Communications|language=en|volume=11|issue=1|pages=110|doi=10.1038/s41467-019-13961-1|pmid=31988294|pmc=6985261|bibcode=2020NatCo..11..110G|issn=2041-1723|doi-access=free}}

The DICE model is an example of a neoclassical energy-economy-environment model. The central assumption of this type of model is that market externalities create costs not captured in the price system and that government must intervene to assure that these costs are included in the supply price of the good creating the externality. Innovation is assumed to be exogenous; as such, the model is a pre-ITC model (it does not yet include Induced Technological Change).{{Cite journal|last1=Mercure|first1=Jean-Francois|last2=Knobloch|first2=Florian|last3=Pollitt|first3=Hector|last4=Paroussos|first4=Leonidas|last5=Scrieciu|first5=S. Serban|last6=Lewney|first6=Richard|date=2019-09-14|title=Modelling innovation and the macroeconomics of low-carbon transitions: theory, perspectives and practical use|journal=Climate Policy|volume=19|issue=8|pages=1019–1037|doi=10.1080/14693062.2019.1617665|issn=1469-3062|doi-access=free|hdl=2066/206694|hdl-access=free}} An extension of the model (DICE-PACE) that does include induced technological change, has strongly different outcomes: the optimal path would be to invest strongly early on in mitigation technology.{{Cite web|last1=Grubb|first1=Michael|last2=Wieners|first2=Claudia|date=January 2020|title=Modeling Myths: On the Need for Dynamic Realism in DICE and other Equilibrium Models of Global Climate Mitigation|url=https://www.ineteconomics.org/uploads/papers/WP_112-Grubb-and-Wieners-Climate-Change-2.pdf|publisher=Institute for new economic thinking}} In contrast to non-equilibrium models, investment in low carbon technology is assumed to crowd-out investments in other parts of the economy, leading to a loss of GDP.

A number of variants of the DICE model have been published by researchers working separately from Nordhaus.{{cite journal|title=A 4-Stated Dice: Quantitatively Addressing Uncertainty Effects in Climate Change|last=Traeger|first=Christian|date=December 1, 2013|publisher=Social Science Research Network|ssrn=2270473}}{{cite journal |last=Popp |first=David |title=Entice: Endogenous Technological Change In The DICE Model Of Global Warming |journal=Journal of Environmental Economics and Management |year=2004 |volume=48 |issue=1 |pages=742–768 |doi=10.1016/j.jeem.2003.09.002 |s2cid=154637373 |url=http://www.nber.org/papers/w9762.pdf }} The model has been criticised by Steve Keen for a priori assuming that 87% of the economy will be unaffected by climate change, misrepresenting contributions from natural scientists on tipping points, and selecting a high discount rate.{{Cite journal|last=Keen|first=Steve|date=2020-09-01|title=The appallingly bad neoclassical economics of climate change|url=https://doi.org/10.1080/14747731.2020.1807856|journal=Globalizations|volume=18 |issue=7 |pages=1149–1177|doi=10.1080/14747731.2020.1807856|s2cid=225300874 |issn=1474-7731|url-access=subscription}}

The DICE and RICE models have received considerable attention from others studying the economic impact of climate change. It is one of the models used by the Environmental Protection Agency for estimating the social cost of carbon. Stephen Newbold of the Environmental Protection Agency in the United States reviewed the models in 2010.

The Basque Centre for Climate Change, in an October 2009 review of integrated assessment models for climate change, discussed the DICE model in detail.{{cite web|url=http://www.bc3research.org/working_papers/downpubli_6.html|title = Integrated Impact Assessment Models of Climate Change with an Emphasis on Damage Functions: a Literature Review|author = Ramon Arigoni Ortiz|author2 = Anil Markandya|date = October 2009|access-date = February 19, 2014|publisher = Basque Centre for Climate Change}}

A report from The Heritage Foundation, a conservative and climate change denying think tank in the United States, called the DICE model "flawed beyond use for policymaking" on account of its extreme sensitivity to initial assumptions.{{cite web|url=http://www.heritage.org/research/reports/2013/11/loaded-dice-an-epa-model-not-ready-for-the-big-game|archive-url=https://web.archive.org/web/20131123191455/http://www.heritage.org/research/reports/2013/11/loaded-dice-an-epa-model-not-ready-for-the-big-game|url-status=unfit|archive-date=November 23, 2013|title = Loaded DICE: An EPA Model Not Ready for the Big Game|last1 = Dayaratna|first1 = Kevin|last2 = Kreutzer|first2 = David|date = November 21, 2013|access-date = February 19, 2014}} Similar criticisms, including criticisms of the specific choice of discount rates chosen in the model, have been made by others.{{cite web|url=http://realclimateeconomics.org/briefs/Stanton_Towards_Greater_Transparency.pdf |title=Towards Greater Transparency in Climate Economics: Deconstructing DICE-2007 (a brief prepared for Economics for Equity and the Environment Network) |last=Stanton |first=Elizabeth |date=April 2009 |access-date=February 19, 2014 |url-status=dead |archive-url=https://web.archive.org/web/20140723012842/http://realclimateeconomics.org/briefs/Stanton_Towards_Greater_Transparency.pdf |archive-date=July 23, 2014 }}{{cite web|url=http://www.lomborg-errors.dk/EconomicModels.htm|title = Criticism of economic models|publisher = Lomborg-errors.dk|access-date = February 19, 2014}} Many of these criticisms were addressed in the 2020 rework listed above.

• Integrated Global System Model
• Pigou Club

{{reflist}}

• [https://github.com/cmkellett/MPC-DICE MATLAB/Octave implementation of DICE model]

Category:Climate change assessment and attribution

Category:Environmental science