Integrated Impact Assessment Models of Climate Change with an Emphasis on Damage Functions: a Literature Review

The document provides a comprehensive review of various Integrated Impact Assessment Models (IAMs), categorizing them into fully integrated, non-CGE, and CGE-type models. It specifically examines the 'damage functions' used to translate temperature increases into economic losses, noting a high degree of subjectivity and uncertainty in these calculations due to a lack of empirical data.

• Integrated Impact Assessment Models (IAMs) are generally categorized by the authors into three types: fully integrated IAMs (containing economic growth, energy, damage, and climate modules), non-CGE models (which rely on exogenous economic scenarios), and CGE-type models (which focus on economic optimization but often lack a proper climate module).
• The treatment of climate change damages in existing models is characterized by a "significant degree of subjectivity involved in the choice of parameters, functional forms and the potential damages"
• High uncertainty in damage functions arises because researchers must extrapolate from a small number of available studies to estimate damages for higher temperature changes and for different global regions.
• Many IAMs use a quadratic damage function (where the parameter 'b' is set to 2) primarily for "analytical simplicity" and "casual familiarity" rather than based on a compelling theoretical or empirical rationale.
• Damage functions based on a fraction of GDP may underestimate total costs because they often exclude non-market or intangible damages, such as losses of species, ecosystems, and human health effects.
• The DICE family of models (including RICE and ENTICE) uses a damage function where changes are proportional to world output and are polynomial functions of global mean temperature change, covering sectors like agriculture, health, and sea-level rise.
• The FUND model employs a more complex damage module where impacts depend on both the level of temperature change and the rate of change, while also accounting for socio-economic vulnerability based on per capita income.
• The PAGE models (PAGE95 and PAGE2002) use a simulation approach with random samples of uncertain parameters to build probability distributions for temperature rise and damages, focusing on 'tolerable' levels and rates of temperature change.
• Certain models, such as MIND, DEMETER, E3MG, DNE21+, and GET-LFL, are noted for having no treatment of climate change damages within their frameworks.

APA

Ortiz, R. A., & Markandya, A. (2009). Integrated Impact Assessment Models of Climate Change with an Emphasis on Damage Functions: a Literature Review. Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/200910200204231130584436.pdf

Chicago

Ortiz, Ramon Arigoni, and Anil Markandya. Integrated Impact Assessment Models of Climate Change with an Emphasis on Damage Functions: a Literature Review. Basque Centre for Climate Change, 2009. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/200910200204231130584436.pdf.

Wikipedia

{{cite report |last1=Ortiz |first1=Ramon Arigoni |last2=Markandya |first2=Anil |title=Integrated Impact Assessment Models of Climate Change with an Emphasis on Damage Functions: a Literature Review |publisher=Basque Centre for Climate Change |date=October 2009 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/200910200204231130584436.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ortiz2009integrated, author = {Ortiz, Ramon Arigoni and Markandya, Anil}, title = {{Integrated Impact Assessment Models of Climate Change with an Emphasis on Damage Functions: a Literature Review}}, institution = {Basque Centre for Climate Change}, year = {2009}, month = oct, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/200910200204231130584436.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }