Reference no: EM131505477 , Length: word count:1000
(a) Business as usual. Set the control parameter μ(t) to zero for each time period. Calculate the optimum Savings path using solver. Set up a square which is the sum of discounted social welfare over the next 300 years that is to 2315. Take as your control variables Savings rate from now till 2115 after 2115 set the saving rate to be the same as the 2115 value. Copy and paste graphs from Excell of the (1) atmospheric concentration of CO2, and the temperature each year till 2200 (on the same graph with primary and secondary axis), (2) the control parameter and the emissions each year, (3) The cost of emission control as a percentage of GDP.
(b) Now calculate the optimum emission reduction path using solver and Nordhaus parameters.. As before set up a square which is the sum of discounted social welfare over the next 300 years. Take as your control variables μ(t) and the Savings rate from now till 2115 with subsequent years taking the 2115 value. Use solver to maximise this with the constraints that 0< μ(t)<1. Copy and paste graphs from Excell of:(1) atmospheric concentration of CO2, and the temperature each year till 2215 as well as the baseline temperature and CO2 concentration from (a) (on the same graph with primary and secondary axis); (2) the control parameter and the emissions each year for the same time period; (3) The cost of emission control as a percentage of GDP.
(c) Now calculate the optimum emission reduction path using solver and Stern's parameters. Go back to using the original world population path in (b). Set η=1.1 and δ=0.001.Use the same method as in (b) to find the optimal control and savings paths. As above graph (1), (2) and (3). Your graphs for T and CO2 should have your results here as well as comparisons with the baseline and the standard Nordhaus results in (b).
(d) Reset the parameter values to those used by Nordhaus in part (b). Now suppose that the damage function is one of the ones suggested by Weitzman. D=exp(0.00048*T4). (So Climate damage is Y-Y/exp(0.00048*T4 ))
Re-do (b) using the new damage function. As above graph (1), (2) and (3). Your graphs for T and CO2 should have your results here as well as comparisons with the baseline and the standard Nordhaus results in (b).
(e) Set Tt+1=Tt in equation (16) and solve for Tt. Ignore the last term involving the sea ocean temperature (that is set this to zero). Show that the equations now imply that when CO2 concentrations double from pre-industrial times (270ppm) the change in temperature will be approximately 3C. This is the climate sensitivity to doubling of CO2 levels in the atmosphere. You will need to use the value for forcing appropriate for 270ppm and 540ppm in your answer.
(f) Start again with all parameter values and equations used in part (b).Suppose climate scientists discover that the equilibrium increase in temperature if CO2 levels are doubled is 5C. You should be able to change your equation for the temperature change so that the change in temperature going from 270ppm to 540ppm (ignoring the ocean terms) would be 5C. With your new equation for T (including the ocean terms) present graphs(1), (2), (3) as described in (b). Your graphs for T and CO2 should have your results here as well as comparisons with the baseline and the standard Nordhaus results in (b).
(g) Consult the literature and discuss the uncertainty in the key parameters discussed above. I have put one paper up that discusses this to get you started ("Climate risks and carbon prices: Revising the socialcost of carbon"). You will need to quote at least 3 papers in your answer. Comment on your sensitivity testsin the light of your analysis of the uncertainties and discuss how much weight should be placed on the slow ramp policy of Nordhaus. The word limit is one thousand words. Please list the word count at the end and use APA style referencing.
Attachment:- CANVAS-IAM-MODEL-2017.xlsx