Table of Contents

New Directions in the Economics and Integrated Assessment of Global Climate Change

Foreword   iii

I . Introduction   1

A. Endogenous Technological Change   3
B. The Theory of the Firm   4
C. Intergenerational Fairness and Efficiency   6
D. Climatic Nonlinearities   7
E. Summary Remarks   8

II . Endogenous Technological Change and Climate Policy Modeling   9
Alan H. Sanstad, Lawrence Berkeley National Laboratory

A. Introduction   9
B. Economic Theories of Growth and Technological Change   11
C. Endogenous Growth Theory and Energy-Efficiency Trends   13
D. Applications to Climate Policy   15
E. Summary and Conclusions   21

Endnotes   23
References   25

III. The Organizational Structure of Firms and Economic Models of Climate Policy   26
Stephen J. DeCanio, University of California, Santa Barbara

A. Introduction   26
B. The Representation of Production in Climate/Economic Forecasting Models   27
C. A Network Model of the Firm   33
D. A New Perspective on Organizations and Environmental Protection   35
E. Conclusions   37

Endnotes   38
References   40

IV. Climate Change and Intergenerational Fairness   43
Richard B. Howarth, Dartmouth College

A. Introduction   43
B. Analytical Approach   46
C. Policy Scenarios   47    
1. Scenario Results   49    
2. “High Damage” Scenarios   52
D. Summary and Conclusions   53

References   56
Appendix: Overlapping Generations Model Description   57

V. A Simple Climate Model Used in Economic Studies of Global Change   59
Stephen H. Schneider, Stanford University and Starley L. Thompson, Complex Systems Research, Inc.

A. Taking Surprises into Account   59
B. Coupling of Simple Climate and Economic Models   59
C. The Need for an Improved Climate Model Component   61
D. The Simple Climate Demonstrator Model   65
E. Global Warming Applications   66    
            1. Varying the CO2 Stabilization Concentration   66    
            2. Varying the Climate Sensitivity   69    
            3. Varying the Present-Day Overturning Rate   69    
            4 . Varying the Rate of Increase in the Concentration of CO₂
                     in the Atmosphere   70
F. Policy Implications   73
G. Conclusions   73

Endnotes   76

References   77

Appendix: Simple Climate Demonstrator Model Description   79