Global Sensitivity Analysis and the Economics of Climate Change
12:30 - 13:30
The complexity of integrated assessment models (IAMs) prevents the direct appreciation of the impact of uncertainty on the model predictions. However, understanding direction of change, interaction effects and identifying key uncertainty drivers are crucial tasks both for modelers and decision-makers. We show that such information is already contained in the data set produced by a Monte Carlo simulations commonly used in IAM studies and that can be extracted without additional calculations. Our discussion is guided by an application of the proposed methodologies to the well-known DICE model of William Nordhaus (2008). A comparison of the proposed methodology to approaches previously applied on the same model shows that robust insights concerning the dependence of future atmospheric temperature, global emissions and current carbon costs and taxes on the model’s exogenous inputs can be obtained. The method avoids the fallacy of a priori deeming the important factors based on the sole intuition.
This seminar has been jointly organized by FEEM and IEFE, Bocconi University.