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This research paper by the Stockholm Environment Institute uses the Climate and Regional Economics of Development (CRED) model to analyze the gap between current climate-economic policy recommendations and the emission reductions required to limit global warming to 2°C. The authors argue that conventional models, such as DICE, often underestimate climate damages and ignore international equity and the needs of future generations. By incorporating updated science, lower discount rates, and cross-regional investments from rich to poor countries, the CRED Optimal scenario demonstrates that it is possible to achieve a high probability of staying below 2°C while simultaneously reducing global income inequality.

This research paper introduces a hybrid "EZ-DICE" model that implements Epstein-Zin recursive utility into the Dynamic Integrated Climate-Economy (DICE) model. The authors aim to separate risk aversion from time preference, a conflation present in standard expected-utility frameworks that often leads to a perverse relationship where higher risk aversion implies less concern for future outcomes.

This report by the Stockholm Environment Institute evaluates the current state of climate economics, arguing that economic modeling has lagged behind climate science. The authors advocate for a precautionary, standards-based approach to policy—such as maintaining a 2°C warming limit—rather than relying on traditional cost-benefit frameworks that often underestimate catastrophic risks and the importance of future generations.

This research paper introduces the Climate and Regional Economics of Development (CRED) model, an integrated assessment model (IAM) designed to analyze the intersection of climate mitigation and international economic development. The model's primary innovations include a focus on global equity through a concave utility function and the use of McKinsey marginal abatement cost curves to project mitigation costs. The authors argue that achieving climate stabilization requires either a very low discount rate or significant capital transfers from high-income to developing nations.

This report by the Stockholm Environment Institute critiques the UK Department for Environment, Food and Rural Affairs (DEFRA) for its 2007 approach to setting the shadow price of carbon (SPC). The authors argue that DEFRA's methodology is fundamentally flawed because it bases the carbon price on an assumed optimistic future stabilization trajectory rather than current emissions trends, resulting in a price that is too low to incentivize necessary abatement.

This research paper uses the Climate and Regional Economics of Development (CRED) model to analyze the relationship between climate policy and development assistance. The authors find that while climate and development choices are nearly independent under extreme assumptions of climate risk, development assistance becomes a decisive factor for global climate stabilization under intermediate risk assumptions.

This white paper by the Stockholm Environment Institute critiques the U.S. government's use of the 'social cost of carbon' (SCC) to guide climate regulations. The authors argue that the administration's 'central' estimate of $21 per ton of CO2 is dangerously low due to a reliance on flawed economic models, inappropriately high discount rates, and the omission of catastrophic climate risks. They advocate for a shift toward science-based targets and cost-effectiveness analysis rather than narrow cost-benefit calculations.