Modeling Climate Policies: A Critical Look at Integrated Assessment Models

Climate change presents us with a problem of intergenerational justice. While any costs associated with climate change mitigation measures will have to be borne by the world’s present generation, the main beneficiaries of mitigation measures will be future generations. This raises the question to what extent present generations have a responsibility to shoulder these costs. One influential approach for addressing this question is to appeal to neo-classical economic cost–benefit analyses and so-called economy-climate “integrated assessment models” to determine what course of action a principle of intergenerational welfare maximization would require of us. I critically examine a range of problems for this approach. First, integrated assessment models face a problem of underdetermination and induction: They are very sensitive to a number of highly conjectural assumptions about economic responses to a temperature and climate regime, for which we have no empirical evidence. Second, they involve several simplifying assumptions which cannot be justified empirically. And third, some of the assumptions underlying the construction of economic models are intrinsically normative assumptions that reflect value judgments of the modeler. I conclude that, while integrated assessment models may play a useful role as “toy models,” their use as tools for policy optimization is highly problematic.